Lord Truscott: My Lords, the noble Lord makes a valid point. It was one of the decisions of the European Union spring Council that carbon capture and storage should be expanded across the EU—the EU should develop up to 12 carbon capture and storage plants up to 2015 and plants should be carbon capture and storage ready by 2020. The noble Lord will know that the Chancellor announced that we are having a competition for a carbon capture and storage plant in the UK.

Lord Rooker: My Lords, in 1996-97, total government spend on flood management in England was £307 million. Last year it was£590 million. The capital sums for the two years were approximately £127 million and £273 million respectively. All these figures include coast protection projects, which often provide significant flood-risk benefits.

Lord Avebury: My Lords, has the Minister seen reports of the leaked e-mails from the World Bank official alleging that, on the orders of the managing director, Mr Daboub, all references to family planning were deleted from the Madagascar country assistance programme? Has she seen reports in the newspapers that other programmes in the region have been tampered with and that the of the World Bank's strategic programme, which was presented at a meeting last weekend, has been watered down as regards family planning and contraception?

Noble Lords: Oh!

Lord Campbell of Alloway: moved AmendmentNo. 39:
	Clause 7, leave out Clause 7

Lord Campbell of Alloway: My Lords, I am reported as having moved this amendment at the end of the first day on Report, but I did not do so. For clarification, I would like to put the record straight. It is reported at col. 109 that the noble Baroness, Lady Ashton, moved one of my amendments, on judicial review, but she did not. It was reported that the amendment that she moved, which was my amendment, was approved. It was not. It is important that I should clarify the situation. I opened on the judicial review amendment and not on the amendment to leave out Clause 7.
	It was getting late and I am not sure what happened, but the Minister spoke to both amendments. I am very glad that she did, because it will save a lot of time today. I accept much of what she said. What she said on the judicial review amendment, which I totally accept, was that she had taken good legal advice and that there was a risk of,
	"inadvertently narrowing the court's discretion".
	The problem was with the inclusion of the word "administrative" in relation to decisions. If the noble Baroness is prepared at Third Reading to move the amendment without the word "administrative", I will be delighted. If she does not wish to do so, I shall do so myself.
	The noble Baroness said that Clause 7 was,
	"an important clause that allows the board to carry out functions that are in effect ancillary to the conduct of its principal regulatory functions",
	and that leaving it out,
	"could reduce the board's ability to discharge its duties".
	Then she said:
	"It is a standard provision".—[Official Report, 16/4/07;col. 110.]
	In view of what she said, I should be content to propose at Third Reading merely to add a qualification to Clause 7. As drafted, it states:
	"The Board may do anything calculated to facilitate, or incidental or conductive to, the carrying out of any of its functions".
	I would add the qualification, "which are in effect ancillary to the performance of its principal regulatory functions". That disposes of that.
	I have one last point. It is said that the clause is in standard form. However, it is far too widely drafted. If it has been picked out of the pigeonhole of the draftsman's formal amendments, it should not be carried into this Bill without qualification. I beg to move.

Baroness Ashton of Upholland: My Lords, I am very grateful to the noble Baroness the Lord Speaker for indicating the correction that has been made in Hansard. The noble Lord, having moved Amendment No. 38, withdrew it. On the issue of judicial review, as the noble Lord will remember from Monday, he was keen to look at my words to consider carefully whether I had done enough in his view to deal with the matter by indicating that of course judicial review would be available, as it would be with other public bodies of this kind. He is of course at liberty to then decide what he wishes to do.
	The noble Lord is also correct to say that the amendment to leave out clause 7, Amendment No. 39, was grouped with Amendment No. 38, and I indeed replied to it. As he rightly says, it was late in the evening. I am afraid that I assumed that, in speaking to Amendment No. 38, he wished me to respond to both Amendments Nos. 38 and 39, as he did not degroup the amendment but left it where it was.
	Clause 7 is essential. As I said, it is a "standard" clause—that is the word that I used. I cited a number of instances where it appears and I hope that the noble Lord will accept that it in no way enables the board to act beyond the parameters of its powers but, rather, gives it within those powers the flexibility that it will need to decide on things such as information technology and staffing. For the benefit of today's debate, I hope that the noble Lord will be able to withdraw his amendment and to reflect on the matter further.

Lord Hunt of Wirral: My Lords, Clause 8 establishes the Consumer Panel. It is vital that on the Consumer Panel, to be established and maintained by the Legal Services Board, there should be a fair degree of representation. Paragraphs (a) and (b) of subsection (4) mention a number of interests and persons. Amendments Nos. 40 and 41 are intended to ensure that representatives of corporate consumers are included on the Consumer Panel. I move Amendment No. 40—I am very grateful to my noble friends Lord Campbell of Alloway and Lord Kingsland for their support—to ensure that regulation is targeted at the specific needs of different situations, rather than operated through a "one size fits all" approach. The regulatory arrangements in respect of the provision of services to lay persons and small businesses may well differ substantially and fundamentally from those that are appropriate for corporate consumers of legal services, where there is less likely to be an inequality of knowledge between the client and the lawyer.
	To achieve its aim, the amendment would guarantee that the Consumer Panel included the full range of consumers of legal services. The prohibition elsewhere in the Bill on any authorised person being a member of the Consumer Panel would undermine efforts to ensure that corporate consumers are represented. In practice, the vast majority of corporate users of legal services instruct law firms through their in-house legal departments. The expertise and knowledge of what corporate consumers require from the law firms that they instruct rests primarily with those in-house legal teams. We in the Joint Select Committee heard evidence from sizeable sections of those in-house legal departments. One lawyer who spoke to us was in charge of an in-house legal team of 500 lawyers, who regularly purchased legal services from outside law firms.
	It is therefore desirable to ensure that the prohibition on authorised persons serving as members of the Consumer Panel is not applied to representatives of corporate consumers. The amendments, in particular Amendment No. 40, are designed to bring that about. I thank the City of London Law Society for the representations that it has made. I particularly thank the group legal director of Emap, Nick Folland, who came to see me with the City of London Law Society and explained this in much greater detail. I hope that the Minister will agree to the amendment.

Lord Kingsland: My Lords, I shall also speak to Amendments Nos. 44 and 45. The amendments would require the Legal Services Board, in addition to its existing requirement to consult the Consumer Panel, to consult appropriately with approved regulators and representatives of the regulated sector.
	The Bill already provides for the Legal Services Board to establish a Consumer Panel and to consult it extensively but it does not contain equivalent arrangements for consulting representatives of the regulated sector. In Committee the Minister resisted the suggestion that a practitioner panel should be established alongside the Consumer Panel. She argued that such a panel was unnecessary, given that, unlike in the financial services sector, where a practitioner panel has been established, there are already well established representative bodies for the legal profession. We accepted her approach. It is surprising, therefore, that the Government have not brought forward an amendment concerning consultation with the regulated sector. In Committee the Minister made it clear that, while the Government were opposed to the creation of a practitioner panel, on the grounds that there were already effective arrangements for representation, she accepted in principle my amendment, which would have required the Legal Services Board to give the same consideration to representations from approved regulators as it gave to those from the Consumer Panel. I refer her to col. 937 of Hansard of 22 January.
	The noble Baroness said at column 942 that she would come back to the issue on Report. She repeated her support for this in later discussions in Committee. On 21 February, in discussing an amendment concerning the "polluter pays" principle in the Office for Legal Complaints, she said:
	"I remind noble Lords that we have already accepted Amendment No. 38 in the name of the noble Lord, Lord Kingsland, which required that Clause 10 will apply mutatis mutandis to representations by proposed regulators, whether in the regulatory or representative capacities. That consultation will have more force as a consequence of my acceptance of that principle".—[Official Report, 21 February 2007; col. 1117.]
	The noble Baroness repeated the point on the last day of Committee when discussing an amendment to require the board to consult on the extent to which its policies are consistent with its duty under Clause 3 to act in accordance with best regulatory practice. She said:
	"In accepting Amendment No. 38, we have accepted in principle that this requirement—
	to consult—
	"should apply also to representations from the approved regulators".—[Official Report, 6 March 2007; col. 149.]
	I recognise that the Bill already requires the Legal Services Board to consult before exercising a number of specific functions. For example, Clause 49 requires the board to consult before issuing policy statements. Clause 52 requires some consultation before the board exercises its powers in relation to regulatory conflict. Clauses 30 to 36, which provide powers about setting performance targets, making directions, issuing public censures and imposing financial penalties, require the board to consult the approved regulator concerned before exercising those powers. But there is no overall requirement to consult on the board's overall approach to the discharge of its functions and, in particular, on whether the scale and scope of its proposed activities are appropriate and proportionate.
	These amendments would fill that gap. The general duty to consult suggested in Amendment No. 43 would require the board to consult about its general policies and practices. That is supplemented by the duty in Amendment No. 44 to establish effective arrangements for consultation with approved regulators and other representatives of authorised persons. I beg to move.

Viscount Bledisloe: My Lords, I confess that I am amazed by the provision that seeks to exclude wills from the provisions of the Bill. Schedule 2(5), part of which the noble Lord's Amendment No. 48 seeks to leave out, states that:
	""Reserved instrument activities" means ... preparing any instrument of transfer or charge for the purposes of the Land Registration Act ... or preparing any other instrument relating to real or personal estate for the purposes of the law of England and Wales".
	Sub-paragraph (3) states that "instrument" includes any contract for the disposition of land,
	"except a contract to grant a short lease".
	So, reserved activities are covered if I want to let a house or some land other than on a short lease, or if I want to give away a bit of my real estate to someone during my lifetime. However, for some extraordinary reason, on my death, when I dispose of all I own and set up some trusts, or something for that purpose, that is not covered. I do not understand how a small transaction inter vivos is caught, but this total disposal of my property on my death is excluded, can be done by anyone and is not an activity governed by the Bill. I look forward to some enlightenment.

Lord Evans of Temple Guiting: My Lords, this set of amendments contains various technical changes designed to ensure that the authorisation and other requirements in the Bill for different types of bodies and individuals apply effectively and consistently. This includes changes in relation to employees, employers and foreign lawyers; changes to ensure that the threshold provisions of the Part 5 licensing regime take account of current practice structures; and further provision for bodies formed under foreign law.
	Amendments Nos. 50, 51, 52, 54, 55, 57, 59, 61, 62, 622 and 623 do two things. First, they ensure that where an employer that is entitled to carry out reserved activities carries out a reserved legal activity through an individual who is not entitled, the employer will commit an offence. This would apply, for example, where the employer allows non-lawyers to conduct reserved activities without being supervised by lawyers. The employer would have a defence of reasonable precautions and due diligence, and the penalty for the offence and other related provisions, such as contempt of court, will be the same as presently set out in the Bill for the offence of carrying out reserved activities if not entitled.
	The amendments are being made to take account of the fact that that there could be instances where a company or firm could be active or complicit in the carrying on of reserved legal activities by an employee who is not individually entitled. The change therefore closes a potential loophole, which could be exacerbated with the increasing regulation of companies or firms as well as individuals, and ensures that sanctions in the Bill are targeted according to regulatory default. Secondly, these amendments ensure that both this offence and the other offence circumstances set out in Clauses 14 and 15 apply to employers whether they are bodies such as companies and partnerships or sole practitioners.
	Amendments Nos. 53, 56 and 68 are technical, ensuring that the Bill's treatment of employed lawyers is consistent and does not disrupt the status quo. To clarify, Amendments Nos. 53 and 56 amend Clause 15 to ensure that a body or individual whose business includes the provision of certain reserved activities to the public will still be able to use its own employed lawyers to carry out other reserved activities on its own behalf. It makes clear that a separate authorisation for further reserved activities will only be necessary where it is intended to provide reserved legal services to the public. Amendment Nos. 68 amends Schedule 3 to ensure that, where certain individuals are exempt from the requirement to be authorised to conduct reserved activities, employers on whose behalf the activities are conducted may also benefit from the exemption in appropriate circumstances.
	Amendments Nos. 86, 87, 312, 318 and 319 ensure that references to registered European lawyers, non-registered European lawyers and other foreign lawyers and practices are consistent with current statutory provisions, and do not disrupt the status quo. In particular, Amendments Nos. 318 and 319 amend Clause 108 to ensure that the definitions in Part 5 do not cause a large number of multinational firms to become alternative business structures purely by virtue of being partially owned by foreign lawyers.
	A further function of the amendments in this group is to make certain alterations to the detail of the Part 5 licensing regime to ensure that the requirements take account of current practice structures and regulatory practice. More specifically, Amendments Nos. 203 and 261 propose technical changes necessary to take account of the fact that members of firms such as limited liability partnerships are often other firms or bodies and not just individual lawyers, and to ensure that any bodies to which this applies are regulated appropriately.
	Amendments Nos. 256, 258, 259, 260 and 274 amend the licensing regime in Schedule 11 to make it clear that licensing authorities will have the flexibility to waive fees in appropriate cases. Amendments Nos. 262 to 273 amend Schedule 11 to provide that licensing rules must make provision for review by the licensing authority of a decision not to approve a person as head of legal practice or head of finance and administration, or to remove a person's designation in relation to one of those roles. This is consistent with the Government's policy; for example, provisions elsewhere in Schedule 11 stipulate that licensing rules must make provision for review of certain decisions that could affect the rights of licensed bodies or individuals within them.
	Amendment No. 305 makes it clear that the obligation which licensing authorities have to trace the beneficiaries of sums recovered following intervention in a licensed body's practice is an obligation to take such steps as are reasonable in all the circumstances of the case. This follows a similar amendment made to the intervention powers of the Law Society in Schedule 16 of the Bill, following an amendment tabled in Committee by the noble Lord, Lord Kingsland, which the Government agreed to consider. We are replicating that amendment in Schedule 14 because it is desirable for statutory intervention powers to be consistent where appropriate.
	Amendments Nos. 304, 627, 632 and 633 make technical changes to ensure that certain provisions in the Bill can be amended as necessary by secondary legislation in cases where it is necessary to take account of bodies formed under foreign law. I thank the noble Lord, Lord Kingsland, and the Law Society of Scotland for the point raised in Committee in relation to Clause 107, which my noble friend agreed to consider.
	Clause 107 enables the Lord Chancellor to modify the provisions of Part 5 in relation to bodies formed outside the law of the UK. The noble Lord queried whether this power should also apply in relation to bodies formed under the law of Scotland or Northern Ireland. The Government have considered this and agree that it would be desirable to extend the power, as the noble Lord suggested. Amendment No. 314 has therefore been tabled to achieve this. I note that the noble Lords, Lord Kingsland and Lord Hunt of Wirral, have added their names in support of this amendment, which reassures me that the Government have adequately accomplished the noble Lord's objectives in this regard.
	Amendments Nos. 627, 632 and 633 create a similar power for the Lord Chancellor to modifythe current definition of manager, as set out inClause 197 of the Bill, to ensure that it remains effective for bodies formed under law outside England and Wales. That is similar to the existing power in Clause 107 to modify the provisions of Part 5 that a new clause is required as the definition of manager applies to other parts of the Bill. The power will be subject to the affirmative resolution procedure.
	The amendments are technical, and essentially tighten up the existing provisions relating to the authorisation requirements for different types of bodies and individuals, and ensure, in particular, that the arrangements in Part 5 of the Bill provide for effective regulation and control of any firm's licence. Failure to make these changes would leave a number of uncertainties, inconsistencies and potential loopholes in the legislation, putting at risk both consumers and providers of legal services. The purpose of the amendments is to ensure that the detail of the regulatory framework can operate effectively and consistently. I beg to move.

Lord Evans of Temple Guiting: moved Amendments Nos. 51 to 62:
	Clause 15, page 7, line 10, leave out "B" and insert "P"
	Clause 15, page 7, line 12, leave out "B" and insert "P"
	Clause 15, page 7, line 12, after first "activity" insert "("the relevant activity")"
	Clause 15, page 7, line 13, leave out "B" and insert "P"
	Clause 15, page 7, line 15, leave out "B's" and insert "P's"
	Clause 15, page 7, line 16, leave out "reserved legal activities carried on" and insert "the carrying on of the relevant activity"
	Clause 15, page 7, line 17, leave out "B in their capacity as employees of B" and insert "P in their capacity as employeesof P"
	Clause 15, page 7, line 18, leave out "Secretary of State" and insert "Lord Chancellor"
	Clause 15, page 7, line 21, leave out "B's" and insert "P's"
	Clause 15, page 7, line 23, leave out "Secretary of State" and insert "Lord Chancellor"
	Clause 15, page 7, line 25, leave out subsection (8) and insert—
	"(8) If P is a body, references to an employee of P include references to a manager of P."
	After Clause 15, insert the following new Clause—
	"Offence to carry on reserved legal activity through person not entitled
	(1) Where subsection (2) applies it is an offence for a person ("P") to carry on an activity ("the relevant activity") which is a reserved legal activity, despite P being entitled to carry on the relevant activity.
	(2) This subsection applies if—
	(a) P carries on the relevant activity by virtue of an employee of P ("E") carrying it on in E's capacity as such an employee, and (b) in carrying on the relevant activity, E commits an offence under section 14.
	(3) If P is a body, references in subsection (2) to an employee of P include references to a manager of P.
	(4) In proceedings for an offence under subsection (1), it is a defence for the accused to show that the accused took all reasonable precautions and exercised all due diligence to avoid committing the offence.
	(5) A person who is guilty of an offence under subsection (1) is liable—
	(a) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum (or both), and (b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine (or both).
	(6) A person who is guilty of an offence under subsection (1) by reason of an act done in the purported exercise of a right of audience, or a right to conduct litigation, in relation to any proceedings or contemplated proceedings is also guilty of contempt of the court concerned and may be punished accordingly.
	(7) In relation to an offence under subsection (1) committed before the commencement of section 154(1) of the Criminal Justice Act 2003 (c. 44), the reference in subsection (5)(a) to12 months is to be read as a reference to 6 months."
	On Question, amendments agreed to.
	Schedule 3 [Exempt persons]:

Lord Kingsland: The noble Baroness resisted this amendment in Committee. Her reasons for doing so, I fear, furnish further evidence that the Government are unwilling to reflect the principle to which they say they adhere—trust the approved regulator—on the face of the Bill.
	Our amendment reverses the presumption that the approval of the Legal Services Board should be needed before rule changes can come into effect. I do not believe that it would be helpful if I were to rehearse in detail a debate that stretched over seven columns—cols. 952 to 960—of Hansard on 22 January. In its course, apposite contributions were made by the noble and learned Baroness, Lady Butler-Sloss, the noble Viscount, Lord Bledisloe, the noble Lord, Lord Thomas of Gresford, and my noble friends Lord Campbell of Alloway and Lord Hunt of Wirral. The Minister made no fewer than 11 interventions in a courageous, but vain, attempt to vitiate their collective wisdom.
	I must confess that I remain at a complete loss to understand why the solution we propose would prove, as the noble Baroness asserted, considerably more bureaucratic and costly than that in the Bill. I believe that my view is shared by all noble Lords who participated in the debate. Under our scheme, the approved regulators will consult on all the changes they propose. The Legal Services Board will know what is intended well in advance of implementation. If it wishes to object, our amendment entitles it to do so. It is our amendment that reflects the underlying philosophy that the Government claim to espouse, not the draft provision in the Bill.
	It is worth recalling the Government's words in response to the report of the Joint Committee, which were that the Legal Services Board should exercise its powers only where the approved regulators were "clearly failing". The Legal Services Board is not there constantly to second-guess the judgment of the approved regulators. It is not its task to comb around looking for trouble. Moreover, it is not as if the approved regulators are composed exclusively of lawyers. Both the Bar and the Law Society regulatory institutions will have a substantial lay component. Of course, if cogent evidence is already available to the Legal Services Board that a particular rule change is likely to give rise to a net negative impact on the eight objectives, it is a different matter.
	The philosophy for the Government should be, as I said in Committee, "Trust the approved regulators". I beg to move.

Baroness Ashton of Upholland: My Lords, I am not sure that my twelfth intervention will make a huge amount of difference. For the benefit of noble Lords who have not had the joy of participating in debates or reading Hansard, let me say that we were looking at two things: first, whether you had a situation where the board gets all the changes and then makes a decision on whether it wishes to have certain changes exempt from the process or with minimal review by the board; and, secondly, whether the board at the beginning says, "We don't want to see the following things" and that only those it wished to see should come forward.
	We looked at the matter in great detail. We considered how it would look if we redrafted it, and we had a good think about it. It is a choice we had to make, which I still think is the right one. We sought to say that our principle in setting up this new framework would be that changes should be sent to the board and that the board can say, either in the course of receiving those changes or, indeed, in advance, that it does not wish to receive certain ones, that some can be exempt and that some require merely minimal approval.
	The noble Lord, Lord Carlile, made a point about wanting to have the code of practice changes. I note his tribute to my noble friend Lord Brennan, which I share. We would want those done in the same way. We do not want this process to be bureaucratic. The question really came down to whether it is right that the board in advance says, "We don't need to see any of the following aspects", or should it receive them and then make a decision later about which it wishes to have exempt. So the question was: did the decision on that rest with the board or the regulator? It is not a question of trust. We hope that this will be one ofthe ways they will work closely together in partnership.
	However, we felt that it was important to leave the matter with the board. It was a choice we made. We do not think that the outcome will be hugely different because we believe that the board will swiftly move to say, "It is quite clear there are areas where we do not need to see the changes that are being made, or where we can deal with them very quickly".
	What I do know is—not in this area but in other areas of life—that small changes sometimes have big effects. Therefore, it is important for the new regime to enable the board to see the kind of changes being made and to be able to consider the effects being made. That was a decision we took.

Lord Kingsland: My Lords, I am most grateful to the noble Baroness for setting out the position that she previously set out at greater length, and perhaps with less continuity, than she has done this afternoon. She has not changed her position, but of course I always respect her for courageously sticking to her guns. However, her answer is not satisfactory to us. Although I shall not be seeking the opinion of the House on the matter today, I shall nevertheless consider whether it would be appropriate to return with the issue at Third Reading. Meanwhile, I beg leave to withdraw the amendment.

Lord Campbell of Alloway: My Lords, I support this amendment, but I have to do so having moved Amendment No. 5, which is related to this amendment. There, I deal with the balance of the relevant regulatory objectives as the basis for a reasoned decision. This amendment rides totally in relation to that. It is very interesting that this balance was approved by the Minister on the first day of Report stage. She said:
	"The board, while operating within the objectives, must balance those objectives appropriately, as noble Lords seek".—[Official Report, 16/4/07; col. 102.]
	There is not much between us on the fundamental principle. If there is, I do not know what it is. On that basis, I support the amendment.

Lord Brennan: My Lords, this group of amendments deserves serious consideration by the Government. Here is a Bill to introduce a super-regulator, the Legal Services Board. They have said that it can be clothed and armed with heavyweight powers but that it will operate with a light touch. Such confidence in regulatory self-denial suggests inconsistency with ordinary human experience. I therefore invite the Minister to consider this state of affairs. If you have a series of separate objectives which can be separately considered, and any one of them will allow the trigger of intervention, the legal services world, to be so regulated, would reasonably expect the board at the very least to have a statement of policy on how it will implement these single objectives at any one time or in combination. These amendments suggests, by the introduction of the words "one or more" or "significant", that you create a state of affairs where there is a policy base for the Legal Services Board to act on.
	"Significant" is a pretty poor adjective, but if it is there to achieve compromise then it is better than nothing. It might be said that it is the kind of word which is so vague as to be incapable of challenge legally or intellectually, but I remind the House that in the Corporate Manslaughter and Corporate Homicide Bill we enacted the use of the word "substantial" as a core ingredient in the creation of a new criminal offence, confident that any jury would understand how it was to be understood and applied. I hope that in dealing with the amendments it will be accepted that this is a desire not to control power exercisable by the Legal Services Board but rather to seek a framework in which the legal services world can operate more efficiently.

Baroness Ashton of Upholland: My Lords, my ambition is that the Legal Services Board will never have to use its powers. The difficulty is that when one sets up in legislation a system that enables action to be taken when things go wrong, the implication or assumption is that the relationship will be a negative one. Our ambitions are more positive. We have talked about partnership, a light touch and how we expect the regulator to operate in an overarching and not an overbearing way. On that I think we are all agreed. Where the board might find itself having to use these powers, we are also all agreed that they should be used appropriately, expediently and efficiently. They should not be used in any inappropriate way, and that is why we have laid out in Clauses 30 to 34 what the powers are, how they are to be used and so forth, and why in Clause 48 we have enabled the board to produce policy statements about its powers and other matters. It is also why in Clause 3 we have said that the board must act within the best regulatory practice. We believe that the objective sought by noble Lords, particularly in the example given by the noble Lord, Lord Carlile, of medical negligence cases, would be covered by the combination of regulatory objectives and the way in which the board will operate. The noble Lord gave a good example of where I would not expect the board to use its power.
	The question is whether there could be circumstances where problems had arisen with one of the objectives and it was felt that action should be taken. The difficulty with the amendment is that it would mean, in effect, that the board would have to look at all the objectives to see whether they, too, were being—I use the word advisedly—flouted. I cite as an example access to justice, an extremely important issue that we have debated and will continue to debate on Report. There could be an issue on which the board felt it had to act but that, on the basis of this amendment, it could not act because the other regulatory objectives were not being damaged. That would hinder the operation of the board in a way that I do not think noble Lords want.
	The adjective "significant" was proposed, although the noble Lord, Lord Kingsland, said that other adjectives could be used. Again, the difficulty for the board is that the word "significant" when considered from the legal perspective—noble Lords know that I am not a lawyer but I do take legal advice—could hinder the board from operating. For example, if the board were working with a small regulator, could a case where only very few people were affected, albeit extremely adversely, be considered significant? Ultimately it would be for the courts to decide, but from the perspective of this legislation, we do not want to put the board in a position where it feels disempowered to act because of the word "significant". However, we believe that the objectives sought by the noble Lord, Lord Kingsland, in this amendment are already achieved in the Bill.
	Noble Lords are right to want to ensure that the board operates properly, that it considers carefully what is happening and why, that it does not take inappropriate action, is light touch in its operations and conforms to good regulatory practice. All that is already set out in the Bill therefore there is nothing between us in terms of what is required.

Baroness Ashton of Upholland: My Lords, I understand my noble friend Lord Brennan—he has given me some of his time to discuss this—and the noble Viscount. But I wish to explain how the reasons for which noble Lords seek this provision in the legislation are already dealt with in Bill therefore they need not move their amendments. The amendments as framed would not have beneficial implications for the regulatory framework that we seek to set out. That is the fundamental difference between us. I am arguing that the amendments are unnecessary to achieve what is required and can therefore safely be withdrawn without fear that there will be a problem in the running of the Legal Services Board.

On Question, Whether the said amendment(No. 119) shall be agreed to?
	Their Lordships divided: Contents, 184; Not-Contents, 132.

Lord Kingsland: My Lords, when Sir David Clementi issued his consultation paper on the appropriate structure for the regulation of legal services, he canvassed two main options. The first was for a unitary system of regulation with a body on the same lines as the Financial Services Authority, taking over responsibility from the professional bodies and other front-line regulators in the legal field. The second is the continuation of regulation based on the professional bodies but with a new board with supervisory powers to ensure that the approved regulators carry out their tasks effectively and in the public interest. Sir David's final report, reflecting the great preponderance of responses to the consultation, favoured the second option.
	The Government appeared to accept this approach. In their response to the Joint Committee report by both Houses, they said:
	"The government agrees that the intention of the Legal Services Board should be to work in partnership with the authorised regulators, leaving them with the responsibility for day to day regulation. The Legal Services Board should exercise its powers only where approved regulators are clearly failing".
	However, the Bill does not, as we have seen on so many occasions, make it clear that the lead responsibility for regulation is intended to rest with the professional bodies, with the Legal Services Board exercising its powers only in the event of significant regulatory failure. Consequently, there is nothing in the Bill to indicate that the Legal Services Board is intended to act as a supervisory regulator, leaving the day-to-day responsibility for regulation with the approved regulators and exercising its powers only where they are clearly failing.
	The Bill is cast in terms that would enable the Legal Services Board to set out detailed templates for the way in which it considers that approved regulators should discharge their functions, to micromanage them and to substitute the board's view for that of an approved regulator, even where the approved regulator's approach is plainly within the range of reasonable decisions.
	When we discussed this amendment in Committee, the noble Baroness indicated sympathy for the principle behind the amendment, although she said that she would have some reservations about the drafting. However, she felt that it was unnecessary to include any provision on the face of the Bill. The noble Baroness said:
	"I do not rule out other mechanisms whereby the Government explain precisely what we are looking for in bodies being established ... Governments have on many occasions issued statements, had discussions with bodies and so on. I was trying not to rule any of that out."—[Official Report, 23/1/07; col. 1045.]
	The prospect of the Government's supplementing the statute through subsequent guidance to the Legal Services Board is, frankly, disturbing. Such guidance may be appropriate with bodies that undertake what are essentially government functions but it is a matter of constitutional importance that the Legal Services Board—the supervisory regulator for the legal profession—should be wholly independent of government. The board should operate in accordance with the statutory provisions and any regulations made under them. It should not be subject to informal guidance from government.
	The Minister's comments reinforce the need for Parliament to set out clearly, through mechanisms such as this proposed amendment, what the relationship between the Legal Services Board and the approved regulators should be. It would be very damaging were the Legal Services Board to act in an over-intrusive way. As the Joint Committee noted, the estimates for the cost of the Legal Services Board are credible only on the assumption that it acts as a light-touch regulator.
	We have already seen that the establishment costs of this institution are likely to be in the area of £40 million and the running costs, £30 million. If it is operated in the more intrusive way made possible by the Bill as presently drafted, the cost of this tier of regulation will rise substantially, as will the costs of the approved regulators in dealing with the Legal Services Board. Furthermore, if the Legal Services Board acts as the primary regulator, treating the approved regulators as its administrative outposts rather than as the lead regulators that they are intended to be, it will become impossible for the approved regulators to attract and retain the calibre of staff that they need to discharge their responsibilities effectively. The result would be a gradual drift towards an FSA style of regulation, in substance if not in name.
	The proposed amendments to Clause 48 are designed to ensure that the Legal Services Board, in its relationship with the approved regulators, acts as the Government say they intend it to do. I beg to move.

Lord Hunt of Wirral: My Lords, I strongly agree with my noble friend Lord Kingsland who put this amendment and those linked with it in context. This is probably one of the most important debates that we are going to have. During the course of the Joint Select Committee meetings, we spent considerable time seeking reassurance from the Minister that the regulator would administer a light-touch system of regulation. I recall that the Minister's colleague, Bridget Prentice, emphatically told us just that:
	"Where the approved bodies are operating effectively, the LSB will leave them to get on with that job properly."
	That has been the whole basis on which we have proceeded. I await the Minister's words with great anticipation, as I sensed, during the course of that important debate in Committee, that she was exceedingly sympathetic to the approach that we are now taking. I look forward to her accepting this important amendment.

Baroness Ashton of Upholland: My Lords, I am always trying to address concerns raised by the noble and learned Lord, Lord Mackay of Clashfern, with great trepidation. I hope that I will succeed, but I do not pretend that I have great confidence. As the noble and learned Lord said, this is about light-touch regulation. As for the language of the noble Lord, Lord Maclennan of Rogart, I blame his education at Balliol; I hope he reads this.
	I was and have been sympathetic to many of the issues raised because there is nothing between us in wanting to establish the right relationship with the supervisory regulator, one which is light touch but with powers to act if necessary. The question is always how to translate that into legislation, as noble Lords who have stood at this Dispatch Box in more eminent positions than mine will know. It is also important that, in trying to further define pieces of legislation, one ends up changing, altering, constraining and restricting how a body may operate.
	The Bill sets the board as an oversight regulator, and makes it supervisory in nature. We recognise the significant benefits in this model. It is entirely right that approved regulators have the freedom to make the right regulatory decisions, in keeping with their duties under Clause 27 and in line with best regulatory practice. But should the board need to—and I hope it does not—it must be able to take effective action. Trying to further define what is called the "B+ model", with which noble Lords will be familiar, in statute may be potentially restrictive.
	In Committee, I expressed concerns about the amendment to Clause 48, in particular about the formulation of limbs (b) and (c) which sets new thresholds over and above those already in the Bill. For each of the regulatory powers, the board must already meet statutory criteria and we have set out clear procedures that must be followed before a power is used. Let us not forget that Clause 48 already obliges the board to make policy statements in respect of how it will exercise its powers under the Bill, and these will need to be consistent with the principles of transparency, proportionality and the other better regulatory principles in Clause 3, which apply to the exercise of all the board's functions, including the making of policy statements.
	Within the legislation, we have already met the objectives that the amendments seek to meet, through the role of the regulatory bodies in Clause 27 and how Clause 3 operates. My difficulty is that the amendments move us beyond that, to constrain and change in a way we would not be able to accept. I have enormous warmth towards the objectives behind these amendments, but they do not take us any further forward. Rather, they constrain.

Lord Kingsland: My Lords, I am grateful to the Minister. We know from what she said in Committee that she supports the principle behind the amendment. However, we have also heard today that she is reluctant to see that principle expressed in the Bill. She said that she was against any attempt to further define the relationship between the Legal Services Board and the approved regulator. However, my complaint, and that of my noble and learned friend Lord Mackay is that there is no definition at all in the Bill of the relationship between the Legal Services Board and the approved regulator, reflecting the principle of lightness of touch, which all government Ministers have said ought to be the prevailing principle.
	We have debated this matter at great length for many months. It is time to test the opinion of your Lordships' House.

On Question, Whether the said amendment(No. 174) shall be agreed to?
	Their Lordships divided: Contents, 169; Not-Contents, 130.

Lord Kingsland: my Lords, I shall also speak to Amendments Nos. 176B and 176C, which are substitutes for Amendment No. 176.
	During the debate of 23 January, the noble Baroness agreed to consider the principle behind the line of amendments preceding the ones now tabled. They centred on the obligations on approved regulators to co-operate with non-legal regulators over issues of regulatory conflict. In consultation with the Institute of Chartered Accountants, the Government indicated that the wording of Amendments Nos. 176A to 176C might be acceptable. While promoting consumer interests everywhere else, the Bill will put at a disadvantage consumers, providers of services from alternative business structures and indeed legal practices employing individuals with other regulatory obligations by not giving them the same rights to raise issues of conflict.
	The Government's justification for rejecting these amendments is apparently that the general duty is sufficient, but if it is sufficient for conflict between an approved regulator and an external regulator, why not for conflicts between two approved regulators? That distinction appears artificial. The Government, after a degree of prevarication have given the institute an explanation of their decision not to table an amendment to Clause 53. As I have just hinted, that is based on the assertion that the general duty forapproved regulators to avoid regulatory conflict is sufficient.
	The provision of legal services is already integrated with many other regulatory regimes. If the Bill is to have the right effect, providing for more flexible and innovative provision, such regimes will become even more integrated. I beg to move.

Baroness Ashton of Upholland: My Lords, I am grateful to the noble Lord for raising this issue. He is right that we have had a detailed conversation with the ICAEW and shared with it our thinking about what we might seek to do and our decision in the end. In all the areas that I have looked at further, I have thought through the policy implications, discussed them with the appropriate people and, where necessary, brought together ideas to see what an amendment might look like. On that basis, we have tried to see whether we would add anything to the Bill or whether, without meaning to, we could create confusion or add burdens.
	Clause 53 places a duty on approved regulators to take account of other regulatory regimes. They are required not only to take steps to prevent regulatory conflict and avoid unnecessary duplication of regulatory requirements but also to provide for the resolution of regulatory conflicts. These duties apply to any approved regulator whose regulated practices include non-lawyer professionals, such as accountants or chartered surveyors. The Bill allows the board to play a role in resolving disputes between approved regulators and external regulatory bodies, provided that the board and the regulators consent and applicable statutory and other provisions allow it. Amendment No. 176A makes that more explicit, but it does not change the policy.
	The amendments do little to help prevent regulatory conflict; Clauses 51 to 54 already provide for that. However, they would place a further burden on approved regulators, who would have an obligation not only to address regulatory conflict with external regulators but also to consider formally and act upon any applications about specific instances. They would increase the pressure on approved regulators, who might be concerned about the possibility of a legal challenge because they had failed fully to address approaches from external regulators They would apply a potential further statutory burden on the board by requiring it to consider such additional references as may be generated as a result of these amendments.
	One of the key reasons that bodies enjoy the status of approved regulator is that they are judged responsible; that is, as bodies of experience and substance which the Government, in taking forward Sir David Clementi's B+ model, have clearly entrusted with the day-to-day regulation of members of the legal profession. Noble Lords will know that that background is an important aspect of what the Government seek to do. They are responsible bodies, and we expect them to behave as such—they do. We expect that approved regulators would not only want to deal with any cases of regulatory conflict—I think that most, if not all, already maintain comprehensive rules on dealing with conflicts of interest—but they would actively want to avoid or resolve any such conflicts.
	We believe that the duties set out in the Bill are sufficient to encourage approved regulators and ensure that they take a proactive approach to dealing with external regulatory conflict. Having looked very carefully at what this amendment would do, I see no justification for change here. Within the framework that we have set up and with the rules that they will have, these responsible bodies are perfectly capable of resolving these issues. I hope the noble Lord will withdraw his amendment.

Lord Carlile of Berriew: moved AmendmentNo. 202:
	Clause 70, leave out Clause 70

Lord Carlile of Berriew: My Lords, AmendmentNo. 202 stands in my name and that of my noble friend Lord Maclennan of Rogart. I shall also speak to the other amendments in this group. Once again, I shall not rehearse everything that was said at an earlier stage; there was a robust debate between my noble friend Lord Thomas of Gresford and the government Front Bench on that occasion. However, as we have decided to move these amendments again, I shall explain why.
	These clauses seek to introduce the so-called alternative business structure, but they achieve two aims that are adverse to the Government's intention in the Bill. First, they will stifle competition where those who espouse competition very strongly—such as ourselves and the noble Lord, Lord Whitty, who I am pleased to see in his place—believe the need for competitive services is greater than anywhere; that is, for people of poorer means and people who live in areas where the provision of legal services is not substantial, such as rural areas.
	Secondly, the introduction of alternative business structures will directly contradict regulatoryobjective (e) in Clause 1(1); namely the encouragement of,
	"an independent, strong, diverse and effective legal profession".
	I urge the noble Baroness to reread every single word of that objective, including "independent", "diverse" and "legal profession". The danger of these structures is that for those who may need them most, who sometimes have the greatest difficulty in enforcing their legal rights or in interpreting their legal obligations, there will be much less of a legal profession available.
	Alternative business structures have considerable attractions. It would be foolish to ignore them. But for whom do they have those attractions? They certainly have attractions for large corporate vehicles, which will wish to invest in using legal disputes as a way of bringing customers into their businesses for other purposes. Supermarket businesses, insurance companies—for example, the car insurance sector—banks and others can readily be foreseen as participants in this market. It is not that they even have to regard legal practice as a profit centre; all they will wish to do is to regard it as a customer centre from which they can earn profits, possibly in connection with legal disputes but certainly in connection with other services they can provide.
	For those living in rural areas it raises the spectre of the destruction of a system that, though not perfect in all its features, has worked pretty well for an extremely long time. In the sort of area in mid-Wales that I used to represent in another place there are, and always have been, small firms of solicitors in market towns, some of them combining together but always providing a choice. One of the things they are able to do with more complex disputes is to say to their clients, "Well, if we do not have the expertise, we will go to someone who does". Those like me and my noble friend Lord Thomas of Gresford—who by coincidence was in the same barristers' chambers in Chester as myself for a number of years—were of course the beneficiaries of that system. That system provides competition at all levels and an expert service which is surprisingly economical when the fees are examined, as they rarely are by some of the greatest cynics. The Bar and, indeed, solicitors are the original consultancy professions. They were there long before this Government and their predecessor turned to consultancy for almost everything.
	What will happen in rural areas is exactly what has happened to the retail sector—the evidence is there. When I first become the Member of Parliament for Montgomeryshire, in the market town of Newtown there were butchers, greengrocers, an excellent cheese shop and an old-established ironmonger. Within a few years a large supermarket chain moved in. The cheese shop closed down 14 days after the supermarket opened. It lost both its custom and its staff to the supermarket. The ironmonger closed not much later, and the best of the greengrocers survived for not much longer. That is what happens when you allow the corporate sector to take over the kind of local services that has served the public well for a long time.
	Alternative business structures are attractive to barristers and solicitors because they know they can move into a large corporate vehicle where they will be cushioned from that often most unwelcome of creatures, the lay client. In normal everyday practice the lay client who comes through the door often has a rankling feeling of injustice; they complain, and they harangue sometimes. The small practitioner puts up with it, deals with them and usually finds a way of satisfying them, even if it is to say, as honest practitioners often do, "I am sorry, there is absolutely nothing I can do for you". They will be replaced with call centres. The lawyers will be attracted by the idea that they will deal only with the most important issues placed before them. They will be able to make policy decisions which will brush aside small housing cases, cheap divorces, small crime, small personal injury claims and so on. The public will be driven to ringing up call centres, which will offer unqualified persons giving poor-quality advice. There is the clearest evidence that that is what the market will produce because it has already done so in many other sectors.
	The experiment with alternative business structures, unless it is extremely carefully piloted and market-tested, is therefore unlikely to do anything but damage. It may be said, "Oh, well of course in rural areas there are the citizens advice bureaux", but citizens advice bureaux, although they are very good organisations, depend almost entirely on the voluntarily given expertise of those very lawyers who will disappear from local communities if alternative business structures are allowed to take hold.
	Alternative business structures are attractive to lawyers for other reasons. If you take the analogy of another fee-earning industry, the advertising industry, decades ago advertising agents ran, rather like barristers and firms of solicitors, small collegiate structures with a few people earning fees. Then they got the idea of going to the market, and, suddenly, we have multi-billion-pound companies that produce capital advantages for their senior partners and players. Exactly the same would happen to the legal profession. I can see enormous advantages for those of us in the profession in turning our barristers' chambers or firms into corporate vehicles. We might even take over the supermarkets in due course as a result of the capital we would raise in the market. Rather like undertakers, we are certain to have business as the years pass because legal disputes always occur. I cannot see how that would aid the competition, much as many lawyers would like to turn their modest share in their office or their barristers' chambers into a few million pounds worth of shares. It cannot be in the public interest to do so.
	Along with, for example, the Legal Action Group, which certainly has legal consumers' interests at heart, the Legal Aid Practitioners Group and the Solicitor Sole Practitioners Group, we have taken the view that these provisions are anti-competitive and likely to destroy a significant part of the profession if not extremely carefully controlled, hence our opposition to them. I beg to move.

Lord Whitty: My Lords, I recognise some of the anxieties that the noble Lord, Lord Carlile, points to. However, it is certainly the view of most consumer organisations that there should be some flexibility in the provision of service and in combining different services that are related in terms of the consumer experience, particularly those that involve buying and selling property and other transactions that require not only a lawyer but a lot of other areas of expertise, which could be brought together.
	The noble Lord seems to think that the movement would all be one way. Apart from what he said in his last remarks, he sees Tesco taking over legal practices. But actually many of these solicitors in small towns will be able to expand into providing multiple services to consumers in a one-stop shop. They will be in a far better place than the supermarkets or even the estate agents in so doing. In his earlier remarks, the noble Lord failed to recognise that we are not plunging into a completely free market. This is a regulated, licensed introduction of an alternative business structure, which still has legal standards and professionalism at its heart, but which brings those services to the consumer together with other related services that the consumer may well want.
	I do not regard the Bill as allowing completely free rein to establishing an alternative structure to the present ring-fenced legal professions. However, I recognise that the entrepreneurship of legal professionals could well be stimulated by that possibility, as well as by other businesses and services combining and enhancing the services that they offer to the public by bringing legal professionals into their role. From the consumer point of view, with a one-stop shop and the ability to cross-refer between the various professions with which you have to deal, especially in relation to property transactions—which, are, after all, the biggest financial decisions that people make in their lives and the largest use that most people make of lawyers—there is obvious synergy in providing through the alternative business structure.
	But there are safeguards in the regulatory structure; indeed, there are more safeguards in the responsibilities on the licensing authorities, which are to be debated in later government amendments. So the dire picture that the noble Lord presents is wrong. We certainly should not dive into this without safeguards but, on the other hand, I can see enormous benefits for consumers in introducing this degree of competition and stimulus to innovation in providing such services.

Lord Campbell of Alloway: My Lords, in the questions to those who gave evidence to the Joint Committee, I raised a series of problems from my experience whenI was, in a sense, part of a similar set-up in Brussels. I will not go into details, but it related to the retention of one's independence as a member of the Bar when in a business relationship of sorts with accountants.
	I am very worried about this, for the reasons recorded, which I shall not express again, concerning the independence of legal advice and, hence, its quality. Therefore, I go along with my noble friend Lord Kingsland. I do not feel that I am in a position to expunge the clause, but I am worried. I would like an effective monitoring system—not a licensing arrangement at large, but one that is controlled by statute—and, perhaps, a pilot scheme. I entirely recognise the terrors expressed by the noble Lord, Lord Carlile of Berriew, but that is the world in which, somehow or other, we must live.

Baroness Ashton of Upholland: My Lords, I am grateful to noble Lords who have spoken. In Committee, we had a very useful and important series of debates on issues that were clearly of great importance to your Lordships. I share the concern. We talked a lot about rural communities in the context of previous experiences, and mentioned the corner shop and the post office. My noble friend alluded to the fact that Part 5 might provide opportunities for small practices to expand to enable them to survive more effectively in rural communities. That is certainly our ambition. We have also talked a lot about access to justice. We will, I hope, consider that more fully when we discuss later amendments. Monitoring is also very important. As the noble Lord, Lord Neill of Bladen, said, he has tabled an important amendment relating to monitoring.
	I shall focus entirely on the effect of removingPart 5, which the amendment seeks to do. I shall not pretend that I am not disappointed to see that the amendment has returned, because one of the important aspects of our deliberations in Committee was, I felt, that noble Lords were trying to improve, rather than remove, Part 5. We talked at enormous length about the opportunities that Part 5 could give to providers and consumers and I thought that some noble Lords felt that we should encourage that as long as—this is critical—the appropriate safeguards were in place. The noble Lord, Lord Kingsland, is entirely right that my noble friend Lord Whitty shared his concerns about ensuring that those safeguards were in place.
	My ambition is therefore that we should discuss those safeguards and take note of the way in which the Government have sought to address them. That will enable me to explain what we have sought to do and noble Lords to move their amendments and to have that very important debate. If we remove Part 5, we do not prohibit alternative business structures. We inhibit their development, for sure, but we do so without establishing the important system of regulatory safeguards in the legislation to ensure that this develops properly. Noble Lords know that limited forms of alternative business structure practice will be able to continue to develop under the existing framework. Section 66 of the Courts and Legal Services Act makes it clear that nothing in the Solicitors Acts, the Notaries Acts or common law prevented solicitors, notaries or barristers from entering into unincorporated associations with other people or restricted the circumstances in which they might do so.
	Current protections are not enough. It is right and proper to develop alternative business structures, but it must be done within a proper regulatory framework to ensure that we have competition and greater innovation to the benefit not only of the consumer but of the legal services sector. We want to do that in a structured way that enables us to protect the consumer and the legal profession. We know that a healthy supplier base is absolutely essential to the provision of legal services and to achieving the objective of improving access to justice.
	We also know that many legal professionals do not fear competition: quite the opposite. There are tools in Part 5 that will enable them to respond to changes in legal services and the business environment and to competition from new entrants into the market. They can use them to provide even better services to clients, which is at the heart of what the noble Lord, Lord Carlile, said he wished to achieve. I know that he wants to ensure that the quality of service provided to clients is of the highest order and the right calibre, hence the rather gloomy picture that he paints. I understand why he does not want the legal profession to lose face-to-face contact and the ability to talk to the client to give the best advice and to have that replaced by some remote structure, which he described by alluding to the call centre experience that he has had.
	We want to achieve nothing other than a better quality of legal service. We do not want to do anything that will prevent rural communities from getting the best possible services. I do not think that the noble Lord intends this, but removing Part 5 could stifle innovation and prevent change. We believe that there is quite a lot of welcome, cautious though it may well be in part, for what might be achieved through alternative business structures to ensure a higher quality of services, a strong and vibrant legal profession, and good advice and support to consumers.
	I therefore hope that the noble Lord will allowPart 5 to remain on the basis that noble Lords have quite reasonably wished to ensure that we have the right safeguards in place. I very much look forward to debating those later in our consideration of the Bill.

Lord Carlile of Berriew: My Lords, the Minister has replied helpfully in her customarily persuasive and courteous way, but I am afraid that we feel totally unpersuaded by what she has said. There is already a competitive market. We fear that the competition in that market will be removed. There is nothing that good lawyers like less than seeing legal work done badly. We believe that, despite the safeguards that are set out in the Bill and in the schedules, and indeed in the amendments that have been so helpfully tabled by some of those who have spoken eloquently in this short debate, we will be left with a situation in which the quality of legal services will diminish.
	The Minister spoke of the existing possibilities of lawyers entering into unincorporated associations with one another. That is certainly possible now, but it is a very different professional picture from one in which there are very large incorporated organisations with a very large profit element to them. I say to the noble Lord, Lord Whitty, who spoke constructively to this amendment, that flexibility already exists, but the evidence is that what has been produced is not that good.
	In the very large-scale market in personal injury cases, for example, we have seen more litigation with less merit. We have seen a significant degree of corporate fraud in the way in which cases have been obtained by corporate vehicles that have placed themselves in that market. Those of us who have been in the profession for a long time have also seen the unseemly picture of commercial organisations persuading people who have been injured in accidents to go to them, but then selling the cases, at a fee per case, to solicitors who then conduct them. I do not understand how that improves the competitive environment for consumers.
	We on these Benches therefore feel intense disappointment that Part 5 remains so unmitigated in the Bill. Accordingly, we wish to test the opinion of the House.

On Question, Whether the said amendment(No. 202) shall be agreed to?
	Their Lordships divided: Contents, 48; Not-Contents, 116.

Lord Turnberg: rose to ask Her Majesty's Government what advice they will seek in formulating their response to the Chief Medical Officer's report, Good Doctors, Safer Patients.
	My Lords, now we have the Government's response, it might be thought that this Question, which I put down some time ago, is somewhat redundant, but I believe I am not too late because the White Paper leaves open the prospect of much further consultation on the ways in which it might be put into practice. Thank goodness for that, because there are some areas of uncertainty which give rise to concern. I am going to concentrate on the proposals as they affect the General Medical Council, and I declare my interest as a former dean of a medical school, past president of a medical Royal College, a one-time member of the GMC and currently president of the Medical Protection Society. In all those roles, I have strived to raise the standards, quality and safety of the care that patients should expect to receive from their doctors. So it should be clear from where I am coming when I say that I wonder whether the Government have got it quite right.
	Let me try to put the White Paper into perspective. Here I reflect exactly what the Secretary of State says in her Foreword:
	"It is all too easy to focus on the incompetent or malicious practice of individuals and seek to build a system from that starting point instead of recognising that excellent health professionals far outnumber the few who let patients down substantially".
	She goes on to say:
	"Most health professionals meet high standards routinely and have a lifelong appetite to be even better. That professionalism is an unquantifiable asset to our society, which rules, regulations and systems must support, not inhibit".
	Unfortunately, what follows falls somewhat short of those sentiments, yet the facts entirely support her statement. Over 1 million patient/doctor interactions take place each day in primary care alone, and every MORI poll shows high levels of trust in doctors by their patients. The most recent poll undertaken in 2006 showed that 92 per cent trusted their doctors. I hesitate to compare this with public trust in politicians or journalists, so I am not going to embarrass my noble friend, but it is considerably lower. I am afraid that this is a political reaction to journalists' reports of the infrequent scandals which do occur and may have driven the way in which parts of this White Paper have been drafted. Unlike patients who largely trust their doctors, the White Paper gives a clear impression of mistrust.
	Of course we have to protect patients from bad doctors, but we have to be sure that the right balance is struck between protecting the public and being fair to doctors, and I am not sure that we have got it quite right. Despite that, I have to say that there is much which is helpful and deserves support: the GMC continuing to oversee undergraduate medical education is very welcome because it does a good job and should continue to do so; and the introduction of a formal system of revalidation for doctors is also welcome, and the fact that the colleges will have a leading role is important. They have been heavily involved for some time in developing systems for regular appraisal, and while they will need time to develop the robust systems required, this too is a very important development. The separation of the investigative and judicial functions of the GMC is an important principle, although it should be pointed out that the GMC has for some time had independent adjudicating panels without any members of the council itself sitting on them. All this is reasonably positive, especially as they all build on existing activities and make them more formal and obvious to everyone.
	But we are left with a number of problematic aspects, and I shall concentrate on just two. First, the effect of the rest of the paper is to introduce a much heavier bureaucratic and, I fear, oppressive regulatory burden. It is worth mentioning here that in the UK we have one of the most over-regulated health systems in the world. A recent publication by the NHS Confederation complains bitterly that there are more than 57 regulatory and inspectoral bodies which attract enormous costs not just to run themselves, but also in the time and effort that trusts and doctors have to put into responding. Against that background, the White Paper suggests that we need not only to enhance the role of medical directors to include the monitoring of doctors in their patch and to introduce GMC affiliates at regional level to monitor those medical directors—although it is not yet entirely clear what their role will be—but also strengthening the role of the Council for Healthcare Regulatory Excellence, a body set up to monitor the activities of the GMC and the other bodies, presumably because they cannot be trusted.
	In addition to all that, two further new levels of regulation are proposed, the first being regional medical regulatory support teams. They are called support teams, but their proposed membership suggests a heavy employer basis set up to exert control of medical directors and GMC affiliates. These teams will also keep a check on the way the colleges undertake the re-validation exercise—they will "quality assure" it. While it is unclear where they will get the expertise to do this, it does suggest that no one trusts anyone to do their job, and all at considerable expense and the loss of a sense of responsibility on the part of individuals as they hand over their professionalism to yet another body. The second level of regulation is another body at the national level, a "national advisory group" whose role and responsibilities are unclear and the need for which remains uncertain.
	I would ask the Minister to look critically at the ways in which we might fulfil everything needed to ensure high quality and safe care for patients without introducing such a seemingly heavy-handed and complex bureaucracy to achieve it. Do we really need all these bodies to keep a check on the others?
	Finally, I want to spend a moment on the vexed question of the standard of proof. The White Paper proposes that the standard of proof in adjudicating on concerns about a doctor's performance should be lowered from the current criminal standard to a civil standard of proof; that is, one based on the balance of probability. It is proposed that the civil standard should be applied "flexibly" and on a sliding scale dependent on the seriousness of the case. Here I have very real concerns. When I see the word "flexible" applied to the law, I worry, because it leaves open the potential for considerable inconsistencies between similar cases in the judgment of the panels. Furthermore, the words "sliding scale" evoke an image of a slippery slope. We are considering here the potential to deprive a doctor of her or his livelihood and leaving them with an indelible stain on their character and reputation. Of course we must protect patients and remove dangerous doctors, but one wants to be pretty clear about the safety of judgments. A low standard of proof leaves open the real risk of miscarriages of justice.
	The White Paper recognises the problem in suggesting that a higher standard of proof will be required when allegations are more serious, but putting this good intention into practice is so dependent on the training of the judging panels and on their ability to be consistent that it is difficult to see how it will work fairly and justly for both patients and doctors. The costs and burden to everyone of a system which seems so loosely drawn up must be a cause for concern, and I ask my noble friend to take this back and at the very least see if he can think of ways in which the system might be made to work consistently and fairly, perhaps by piloting it in some way.
	There are many other aspects of the White Paper which I am sure other noble Lords will cover in the enormous length of time in which they each have to speak, but I finish by pointing out that it was the Shipman affair which precipitated much of this work. While Dame Janet Smith's report failed to throw up any suggestion that the GMC had itself behaved wrongly in any way, we have to ask ourselves whether the proposals in the White Paper would deter a determined murderer who happens to be a doctor. Unfortunately, I rather doubt it. This is an opportune moment to look at what should be done to improve the care and safety of patients, so I welcome the White Paper. But it will be vital to ensure that in the consultations we are now promised, we are able to make it work effectively and, most important, proportionately on the problems we are seeking to resolve.

Lord Colwyn: My Lords, I congratulate the noble Lord, Lord Turnberg, on securing this important debate and giving us the opportunity to help advise the Government on their response to Sir Liam Donaldson's report. I declare an interest: I am both a fellow of the British Dental Association and registered with the General Dental Council.
	The British Medical Association has described the Chief Medical Officer's recommendations as a missed opportunity that has failed to harness the medical profession's enthusiasm for change. The Government's response sets out a programme of changes to the UK's system for the regulation of health professionals. Sadly, the proposals add up to the loss of professionally led medical regulation.
	Professional regulation is a complex area and time is short, so I will limit my remarks to two broad areas. First, there is the critical nature of the four interlocking functions of healthcare professional regulation. Any future Bill put before this House should support the role of regulators in maintaining a robust and accessible register of practitioners, have a key role in setting the standards for practice and supporting educational standards and deal with registrants whose performance consistently or seriously falls below acceptable standards. Any significant fragmentation of those roles would be to the detriment of patient safety. I therefore welcome the importance the White Paper attaches to proper co-ordination and coherence across those interlocking functions.
	The second issue is that of the mobility of healthcare practitioners across borders, particularly within the European Union. Sir Liam Donaldson's report and the subsequent White Paper both raise the issue of communications skills and language competency. While I recognise that there may be limits under European law for blanket language testing of health professionals from the EEA, I am not sure that the White Paper's response deals with the issue sufficiently. Placing responsibility for language testing on NHS employers may be one part of the solution, but that fails to deal with the large numbers of healthcare professionals who operate outside the NHS or in a self-employed environment where the risks to patient safety may be the highest. I should be grateful if the Minister could clarify this in his reply.
	Three minutes is not long enough to comment on these important changes. The White Paper states that the Government will publish a detailed implementation programme. Primary legislation is expected in the next parliamentary Session, although some of the proposals can be implemented through secondary legislation. I hope the Minister will be able to provide details of the timing of the publication of the implementation plan and details of the groups that will have to be set up to give careful consideration to this wide range of changes.

Baroness Emerton: My Lords, I thank the noble Lord, Lord Turnberg, for introducing this debate. I declare an interest in that I was chairman of the United Kingdom Central Council for Nursing, Midwifery and Health Visiting and chaired the professional conduct committee. I was also a lay member of the General Medical Council and a member of its professional conduct committee.
	The Nursing Midwifery Council is the UK regulator for two professions: nursing and midwifery. The primary purpose of the NMC is protection of the public. It does so through maintaining a register currently standing at 685,000 registrants. The NMC and the GMC both accept the recommendation in the White Paper of moving the standard of proof from criminal, beyond reasonable doubt, to the civil standard, the balance of probabilities. The BMA and the RCN are opposed to the change. Speaking from my personal experience, I would have found it very difficult to make a judgment under the civil standard when considering the future of a practitioner in relation to safety to the public, as well as to the possible loss of livelihood for the practitioner. I realise that the White Paper is suggesting a sliding scale being applied to the civil standard, but surely such an important decision should be based on "beyond reasonable doubt"; that is, a certainty on what has taken place rather than "more likely than not", while at the same time safeguarding the presumption of innocence of the registrant. The suggested sliding scale is permissive and would give the adjudication panel discretion on how to deal with a particular case. That would create uncertainty for all parties concerned. If the sliding scale were to be introduced, there surely would need to be supporting regulations to provide definitive guidance to all parties.
	The White Paper sets out the process for an appeal on the decision of the adjudicating committee; that is, that an appeal will be heard in the High Court. If the adjudicating panel has the status of a court, it surely cannot be right for another court of first instance to hear an appeal. At present, in the civil system, an appeal from either the county court or High Court goes to the Court of Appeal. Surely the adjudicating panel should be on a par with a court of the first instance. Why are Her Majesty's Government recommending downgrading the appeal from the referral to the Judicial Committee of the Privy Council to a court of the first instance?
	The White Paper proposes an implementation plan. Meanwhile, the current regulating bodies must continue their functions effectively and efficiently, while at the same time preparing for the changes. I bring two concerns of the NMC. In the spring of 2008 an election has to be held for the English council members, at a cost to the registrants' fees. Should the new organisations be in place in 2008, the newly elected members would be redundant and the registrants not amused at their fees being used in this way.
	Another concern is that the advanced nurse practitioners are currently practising without the protection of a register to the public and the practitioners themselves. Her Majesty's Government have indicated that the council will be able to press ahead with a register. Is it not possible to bring forward permission for the council to open a supplementary part of the nursing register when so many advanced techniques are being carried out without protection to public or the practitioner?

Baroness Jones of Whitchurch: My Lords, I welcome the opportunity to contribute to this debate and to echo the emphasis of my noble friend on the need for wide consultation on this important issue. Some recent disturbing high-profile cases have underlined once again the need to put patient confidence and patient safety at the heart of the governance of the medical profession, but in the necessary push for reform we should also bear in mind that our current medical training and regulatory regime is respected as a gold standard internationally, the overwhelming majority of doctors are dedicated to providing high-quality patient care and patients continue to report high levels of trust in their doctors. This is not a plea for complacency; far from it. It is right that the GMC regularly initiates its own reform agenda as well as welcoming external review. But it is a plea for reform to be proportionate and substantiated.
	I declare an interest. I am a member of the GMC's fitness to practise panel, and I have sat on a number of disciplinary cases over the past year. That experience has provided an interesting contrast with my previous career as a trade union official, where for many years I championed employment rights and represented cases at employment tribunals. I have found the difference in the quality of the experience compelling. In particular, I have been impressed by the meticulous care taken to ensure that fitness to practise panels operate in a fair, transparent and independent manner. The panel selection process, the training, the care taken to assemble the cases, the conduct of the hearings and the review and feedback mechanisms have been refined over many years and are, to my mind, of enviable quality. The overarching principles in good medical practice and a commitment to patient safety cross-reference every stage and every decision. That is not to say that every decision is perfect. Even with the most professional system in the world, human beings are still fallible. In my experience, however, the current GMC culture faces up to those issues and learns from the mistakes, and surely that is the most important response.
	I remain concerned that the report proposes a separation of the investigation and adjudication functions in fitness to practise cases. I acknowledge the superficial attraction of adjudication being undertaken by independent tribunals, but fear that the reality would be less expertise, less consistency and less trust in the process. A change of this importance should only be contemplated if the outcome will deliver better quality decisions, seen to be in the public interest, and I do not believe that that case has been made.
	Finally, I should like to say a few words on the proposals for local GMC affiliates. Clearly more needs to be done to ensure that professional standards, set nationally, are applied consistently at a local level. But my concern is that the concept of GMC affiliates will concentrate responsibility for local standards in too few hands. Putting it bluntly, it lets everybody else off the hook. The solution to high standards of clinical governance has to rely on good quality training for medical and non-medical staff, emphasising personal responsibility, and strengthening the employment role of trusts and medical employers.
	I urge consideration of phased reform in these areas, with a period of evaluation, before contemplating more complex and, some might say, more bureaucratic changes.

Lord Patel: My Lords, I, too, thank the noble Lord, Lord Turnberg, for securing this debate; of course, it would have been better to have had more time.
	Much of what I have to say has been covered by the noble Lord, and I agree that there is a clear need for further elucidation of how many of the recommendations would work in practice. However, I am pleased that patient safety is central to all the proposals in the White Paper. But then, I would say that, wouldn't I? I am the chairman of the National Patient Safety Agency. While I am at it, I might as well declare my previous interests, relating to colleges, the GMC and educational authorities.
	I have some concerns, not about the proposals but about how clear, crisp legislation can be drafted on recommendations on affiliates, information-sharing and rehabilitation, for example. Who would the affiliate, as a local regulator, be accountable to? Could there not be a potential conflict of interest? How will she or he work across various NHS and private sector providers of care? Hard regulatory information about an individual practitioner is relatively easy to legislate for, but softer information and its sharing is much more complex. The questions are how and when the work will be taken forward, and who by?
	I welcome the proposals on rehabilitation for health professionals who get into difficulty. This is a proper way forward and a modern approach to workforce management. We already have a framework developed by the National Clinical Assessment Service—part of the National Patient Safety Agency—to take this forward. In my view, it does not require further legislation. What is being done to do this and, importantly, how will it be resourced? For example, over the past three years about 500 doctors have been referred to the National Clinical Assessment Service for further evaluation. If revalidation and recertification throw up the same percentage of doctors—about 3 per cent to 5 per cent—the resources required would be considerable.
	The briefs that we have received, particularly from the GMC and the BMA, differ in their perception of how this will work. However, my view is that revalidation, recertification and appraisal work, which will now form the statutory responsibilities of the colleges, is the right way forward. The colleges will have to recognise that they will have to produce, as the noble Lord, Lord Turnberg, said, a robust system that can be tested and that they have to be accountable. I hope that they will address that. In my role with the National Patient Safety Agency, I will look to see that patient safety is embedded thoroughly in all the proposals.

Baroness Masham of Ilton: My Lords, there is nothing more important for patients who need a doctor to have one who is good, gets the diagnosis correct and sees that the patient has the appropriate treatment and care. Years ago, when I was a member of the Yorkshire Regional Health Authority, I was invited to open a GP surgery in south Yorkshire, which I did. Recently I was told that Dr Shipman had worked there. I shuddered. Doctors are usually trusted members of their community, doing the best for their patients, not killing them.
	Last week a physiotherapist told me that she had heard of a very disturbing incident recently. A lady, living in a rural village in north Yorkshire, who did not have family support and was an amputee, had serious diarrhoea and vomiting. The GP visited. The women had only an informal carer. No care plan or professional nurses were arranged. When the GP had not managed to improve the situation and the patient was deteriorating, the informal carer bundled her into her own car and took her to the local hospital. The hospital staff were horrified when they found that she was dangerously dehydrated. She died soon afterwards. Many people are concerned about this case; they wonder what has been written on the death certificate and if there will be an inquiry. She was a lady in her 50s.
	I am pleased that the General Medical Council, in its submission to Sir Liam's review, has identified as one of its priorities greater patient and public involvement and easier access for patients and employers for information about their doctors. I hope that voluntary organisations representing patients in different ways will be able to help the Government in their response to this. With so many upheavals in the National Health Service and many doctors becoming disheartened and complacent, there need to be clear pathways of communication so that vulnerable patients receive the correct treatment and care.
	When I was a member of the family health service authority in north Yorkshire, we knew how difficult and slow the procedures were in dealing with doctors who could put patients in danger. Two particular cases come to mind—one is a serious drug addict and the other an alcoholic. There can be a serious problem of young doctors drinking too much and becoming alcoholic in later life. There is also the difficult situation when depression and mental illness present. I hope that the dangers of such risks will be taught to medical students, involving their patients and themselves. This is an important subject—the safety of patients should always come first.

Baroness Murphy: My Lords, a patient of mine, a retired plumber in Deptford, once said to me, "I suppose doctors are like plumbers—a third good, a third average and a third you wouldn't want anywhere near your drains". We might argue about the percentages, but most doctors would acknowledge that there is some small truth in the wisdom of the plumber in Deptford.
	The public want us to take action to address their concerns about the quality of healthcare. We should support any endeavour to improve lifetime professional practice. Liam Donaldson's report achieves about the right balance between heavy-handed regulation and the developmental supportive approach, which may not be popular with all my colleagues. How the Government respond to that by putting in the bureaucratic processes and systems to support it, I am not sure has been fully worked out.
	I declare an interest as chair of council at St George's, University of London, which has a medical school. I want to comment on aspects of medical education. First, I strongly welcome the proposal that the GMC's judicial hearings should accept the standard of proof of the civil courts; I welcome the flexible approach. As an NHS manager, I was obliged to welcome back many colleagues whom I was pretty sure would get their comeuppance from the GMC, only to have the case fail as a result of inappropriate standard of proof. I was then faced with the horrible disciplinary dilemma of the doctor coming back to the trust without having a proper way to deal with it. The standard of proof is inappropriate. It is crucial that we create a system whereby the GMC system of regulation is more closely related to the local disciplinary processes and support systems within the trusts. Although the new affiliate system may become over bureaucratised, it is, in principle, a good way to achieve that.
	I support recommendation 23 that students should be registered with the GMC and the proposal for new GMC affiliates on the medical school staff to operate fitness to practise in parallel with the system for registered doctors. However, in view of the fact that expertise in these matters is not easy to come by, regional teams of affiliates with real experience of issues could build up expertise within medical schools. That might be preferable to multiple local affiliates.
	These issues need sympathetic and careful handling. A first-year student's problems and bad behaviour may be acceptable in the first year, but not in the final year. We need to develop sympathetic systems to look at fitness to practise in medical students. Overall, I welcome this report and look forward to the Government's further responses.

Baroness Finlay of Llandaff: My Lords, I, too, thank the noble Lord, Lord Turnberg, and declare that I am registered with the GMC. The foreword to Good doctors, safer patients points out,
	"that excellent health professionals far outnumber the few who let patients down substantially".
	How true that is. Reform must command the confidence of doctors and patients alike, so regulation must be truly independent of government and interested parties yet encompass the expertise to assess complex issues.
	Revalidation processes must be fair and consistent throughout the UK because there are variations in clinical governance, structures and appraisal systems, particularly in primary care, and diverging health structures are increasingly emerging throughout the four parts of the UK. Revalidation must be flexible to cope with different work settings and career paths, including those outside ordinary clinical medicine.
	The engagement of the Royal Colleges will be crucial in holding the confidence of the profession. The task of the GMC in co-ordinating all stages of medical education is a welcome step towards that. But can the Minister clarify when local NHS systems throughout the UK might be ready to deliver what will be required of them? As professional mobility increases, non-UK graduates who practise medicine here must be subject to the same level of regulatory scrutiny as UK graduates: the standard must be the same.
	The disciplinary elements are of concern. If the standard of proof is to be applied flexibly, the profession will seek the assurance that the criminal level of proof will be required to strike a practitioner off the register, whereas the civil level of proof will be used to guide retraining.
	My last point is about recorded concerns. The danger is that recorded concerns will push doctors into defensive practice. Sometimes, it is in the interest of the individual patient to take a risk. We already have clinical hesitation at times, driven by defensive practice. A vexatious complainant or another member of staff who bears a personal grudge may seize on an action that is a valid patient-orientated decision, but falls far outside the current guidelines or protocols. I fail to see how that doctor is guaranteed a fair hearing and without being confident of a fair hearing, human nature is to veer on the side of precaution, stick within the protocol and, in the process, deny a patient. Patients are complex individuals, but guidelines and protocols are written for an average and can be too rigid. A very specific example is that it is now almost impossible to get an epidural put into a patient in pain at home, whereas some years ago it was easy. It is such un-standard practice that anaesthetists will simply not undertake it.
	Overall, the intention of the documentation is good, but the proposed system is complex and proposals such as affiliates may eventually work against some patients with complex and unusual needs.

Earl Howe: My Lords, this has been a good debate. In the time available it is not possible to do more than skim the surface of some very important issues, although the noble Lord, Lord Turnberg, managed to do more than that. Most of us, I think, will have read the Government's White Paper with a mixture of relief, acceptance and questioning: relief, because of what it might have said, but did not, especially in relation to undergraduate medical education; acceptance, because on the whole it appears carefully thought through; and questioning, because of the detail around some of the proposals, which is quite simply absent.
	The really positive part of the White Paper is what it says about professionalism. Some feel that we are looking at the demise of professional self-regulation; I am not so gloomy. Certainly, with a 50:50 split of professional to lay members on the council, doctors will no longer hold sway over decision-making but, there again, nor will anyone else. As with so much in life, we are dealing here with public perceptions. That, I am afraid, is the answer to the BMA, which has questioned why members need to be appointed rather than elected and why it is necessary to have a separate adjudication body, given that already council members no longer sit on panels.
	It is rather like the situation regarding the Food Standards Agency 10 years ago. There was nothing at all wrong with how MAFF dealt with food safety, but public perceptions were otherwise, and in terms of commanding public confidence the FSA has largely been a success. Indeed, that is what we have to remember throughout this debate: the system of medical regulation, if it is to work, has to command the confidence not only of the profession but also of patients and the public. The key thing for the profession is that the GMC should be independent of government, be in charge of setting professional standards, and be in control of training. All those things are retained under these proposals. But we need to ask what is next.
	There is a whole lot here which is still a complete mystery. With revalidation, how on earth can it be made to work fairly between different types of practitioner in different settings? How bureaucratic will it be? The concept of GMC affiliates is completely untried. We are looking at giving a lot of responsibility to single individuals; how can we make sure that the system is fair? The civil standard of proof and the sliding scale sound easy when they are explained, but how will that actually work in fitness-to-practise cases in a way that is just to patients and doctors and consistent between comparable cases? What appeal or redress will there be? These are some of the issues that will need working through in the next few months. I hope that the Minister can shed some light on them today.

Lord Hunt of Kings Heath: My Lords, this has been an excellent debate in which noble Lords have made some very telling points in a very limited time. I thank my noble friend Lord Turnberg and all other noble Lords who have spoken. I shall say more about how we intend to take the work forward, but this early opportunity for such an informed debate will be extremely valuable to me and my officials as we work through some of the details and answer some of the questions that noble Lords have raised tonight.
	I commend the noble Lord, Lord Turnberg, in what he said about the common desire to raise standards and quality. I welcome his support for aspects of the White Paper and entirely endorse his comments and those of my noble friend Lady Jones of Whitchurch about the trust of patients in doctors. The noble Baroness, Lady O'Neill, is in the Chamber, although she has not spoken. When it comes to trust I think that one could do no better than to read her marvellous Reith lectures in that area. I have always taken that as a central foundation in the approach that we should take to the regulation of professionals.
	We must also ensure, as the noble Earl, Lord Howe, said, that there is public confidence in the regulatory approach and the public can see that the regulatory approach is appropriate. The point that the noble Earl made about the Food Standards Agency is very telling; while there may be controversy about individual decisions made by the FSA from time to time, it has restored the public's confidence in the regulatory approach to food. That is surely what we seek to do in taking forward the White Paper proposals.
	I pay tribute to the current work of the regulatory bodies, on which my noble friend Lady Jones made some very important points. I am full of admiration for their work; I know the efforts that they put in to enhance credibility and the standard of their work and I pay tribute to the members of those regulatory bodies. I reiterate that point and respond particularly to the noble Earl, Lord Howe. I am very keen to ensure that healthcare professionals continue to be involved in professional regulation. I believe that over the past 100 to 150 years—and in the case of bodies such as the Royal College of Physicians and the Royal Colleges of surgeons, hundreds of years—they are the bodies that have been essentially responsible for upholding standards and enhancing the role of medical and health professionals.
	I assure noble Lords that I want those professionals to continue to have ownership of that regulation in partnership with those members of the public who represent the public interest. But it is vital that we have the highest calibre of health professionals around the table of health regulators in future. Since it is my responsibility to take forward the White Paper, I fully intend to make sure that that happens.
	I very much understand the comments of the noble Lord, Lord Walton, and my noble friend Lord Turnberg and their fears about over-regulation and bureaucracy. I, too, have read the report of the NHS Confederation and am ensuring that my officials work with that body so that we learn the lessons. I do not have time to talk about our more general proposals on regulation and pulling together some of the current regulators such as the Healthcare Commission and, in social care, the Mental Health Act Commission. I very much take the point that we must ensure that there is rigorous regulation for local NHS organisations which is not duplicated or overly bureaucratic. I am very much alive to the risks of bureaucracy in relation to the White Paper proposals; I shall want to prevent that. That is why the key reforms will be piloted in partnership with the professions and healthcare providers.
	We want to ensure that proportionate action does not hamper patient care with heavy-handed bureaucratic regulation. I say to my noble friend that the regional medical regulation support team is not a formal regulatory function or a new layer of bureaucracy; it is about bringing together key individuals in the region concerned with maintaining high professional standards. It means that medical directors facing difficult cases—some medical directors may not have much experience with very difficult cases—can draw on local expertise to advise them. That is far from being bureaucratic; we hope that it will aid the speedy resolution of such cases.
	The noble Baroness, Lady Murphy, mentioned the proportions "A third, a third, a third" in this context. That is a little harsh, although perhaps as politicians we would be prepared to accept that; I do not know. However, she is right: we want to get a balance between regulation, the development of the profession and standards. We want professional ownership in helping to develop those standards. That is what I want to see come out of this—the balance to which she referred.
	The noble Baroness, Lady Barker, referred to disparate provision. I do not recognise that. If she is referring to a system where there are more diverse providers, then I recognise what she is saying. I agree with her that as we devolve more and more responsibility to a local level, both in providing and commissioning services, regulation is the method by which you ensure the consistency that she asked for. That is achieved partly through the professions' individual regulatory bodies and partly through our proposals to have one regulator of services. I entirely agree with her about the end product of that regulatory action and that we need consistency of approach, not duplication and over-bureaucracy. The noble Baroness raised the important issue of communication. She will know that in a few weeks' time a local government Bill will arrive in your Lordships' House. I understand that a number of noble Lords will take part in those discussions, which I very much welcome. She is right about communication. Dr Shipman was a much loved doctor, respected by his colleagues. Indeed, I believe that he was for some time secretary of the local medical committee. That shows some of the issues that have to be tackled. It is not just about the role of the GMC; it is about the role of a number of people and functions which we clearly need to improve. We will establish a national advisory group on regulation to help us tease out some of the answers to the questions noble Lords raised. It will be inclusive. I hope it will ensure that we get the proper balance that noble Lords require.
	I understand the seriousness of the points that the noble Baroness, Lady Emerton, and the noble Lord, Lord Turnberg, made on the standard of proof, but moving to the civil standard of proof for all regulated bodies will ensure the consistency of approach that is required. I know that my noble friend Lord Turnberg is concerned about the use of the term "flexibility", but the whole point about the civil standard of proof, which has worked perfectly satisfactorily in many cases, is that it can take account of the circumstances and gravity of individual cases. I am not aware that the regulatory bodies that use the civil standard have such problems. I suggest that there is an opportunity for all the regulatory bodies to come together to discuss this issue because there is current practice on the operation of the civil standard. Of course it must work fairly for professionals and patients. The noble Baroness, Lady Murphy, made very important points about the impact that the criminal standard has had on certain professionals who really ought not to be practising but, because of the standard of proof, have been allowed back into practice.
	The noble Lord, Lord Patel, emphasised safety. As chair of the NPSA, he is in a very good position to do so. He emphasised the importance of revalidation that allows health professionals to demonstrate that they remain up to date and fit to practise. That must be right. I very much sympathise with the relevant and important comments of the noble Baroness, Lady Murphy, on medical students. I am learning a lot about medical training as I consider the joys of the NMC. I say to the noble Lord, Lord Patel, that we shall look at how NHS appraisal systems can be developed to provide the GMC with the information that it requires.
	My noble friend Lady Jones is right to say that the GMC has moved towards an internal separation of its investigation and adjudication functions. I pay tribute to the work that has been done and the impact it has had. But, rather as the noble Earl, Lord Howe, suggested, we feel that in order to meet some of the genuine criticisms that have been made, it is right that an independent body should adjudicate such matters. We are determined to follow that course.
	The noble Lord, Lord Patel, raised some very interesting points on the creation of GMC affiliates, which I will ensure officials consider. We see great potential in affiliates. They will ensure that doctors working for the GMC in every part of the country are available to ensure that patients' concerns are heard, investigated properly and tackled where necessary. For too long there has been a gap between what employers do locally to manage concerns about doctors and what the GMC can do nationally to address this. There is a great opportunity for early intervention. The benefit of early intervention is that in many cases problems can be nipped in the bud and dealt with rather than escalating and ending up at the GMC, perhaps many months later. Some cases ought to go to the GMC as quickly as possible but we know that in many cases the current system is simply too slow and inadequate to deal with problems when they first arise. Affiliates have a very important role to play.
	The noble Baroness, Lady Emerton, raised an important point about forthcoming elections to some of the regulatory bodies. I understand the point and am considering what ought to happen in that case. There has been a warm welcome regarding the future appointment of members. I very much endorse the comments of the noble Lord, Lord Walton, about the need for independence in that process. I have no doubt that it is right that we have an independent process. Equally, we have to ensure that only the highest calibre people, whether professionals or lay people, are appointed. It is essential that the people around those regulatory tables command absolute confidence among professionals and the public.
	I understand the issue that the noble Baroness, Lady Finlay, raised about recorded concerns. I should be very concerned about the practice of defensive medicine if what she mentioned were to happen, as clearly such practice is often not in the interests of the patients concerned. She has raised that point in previous debates on palliative care. I understand her points about fairness in the use of recorded concerns—getting the balance right between fairness to members of the public with legitimate concerns and fairness to the professional concerned. I shall ensure that her comments are fully considered in this work.
	The noble Lord, Lord Colwyn, suggested four principles of regulation, with which I very much agree, and said that he did not want to see it fragmented. I also agree with him on that, although the argument for the independence of adjudication is very well made. I very much endorse ensuring consistency not just within a regulatory body but between regulatory bodies. I take his point about the importance of language. Clearly, we have to consider the issues of self-employed people. I gently point out to noble Lords that we are governed by European legislation in this area. I will not pretend that this is easy, but I accept that it is a very important challenge, which we must face up to.
	I noted the comments about the Council for Healthcare Regulatory Excellence. It is appropriate for me to pay tribute to Jane Wesson, the chair of CHRE, who announced her resignation a few days ago. I do not want this to be a Big Brother agency; I do not want it to duplicate the work of the regulatory bodies. I want it to be there to provide strategic leadership and advice and to work well with the regulatory bodies.
	This has been an excellent debate, and I thank all noble Lords for their very important points. I have no doubt that we will have a further opportunity to debate the issues, and I assure noble Lords that their comments will be fully taken into account in this work.

Baroness Ashton of Upholland: moved Amendment No. 203:
	Clause 71, page 40, line 35, leave out "an individualwho is"
	On Question, amendment agreed to.

Lord Hunt of Wirral: My Lords, the purpose of the amendment is to enable legal disciplinary practices that have a substantial majority of lawyers but which do not have external ownership and provide only the services that an ordinary solicitors' firm can provide to be regulated under the Law Society's mainstream regulatory amendments.
	As the Minister will know well, I have on several occasions referred back to the excellent report bySir David Clementi issued in December 2004. His review of the regulatory framework for legal services in England and Wales favoured a step-by-step approach, to which we have referred in previous debates. He ended up, in the final paragraph of his review—paragraph 104—by saying:
	"The proposal of this Review is that attention should focus on the setting up of a new regulatory system for lawyers with the LSB at its centre, and the authorisation of LDPs".
	He continued:
	"This would represent a major step towards MDPs, if at some subsequent juncture the regulatory authorities consider that sufficient safeguards could be put in place".
	That approach won the unanimous support of the Joint Committee, which I had the honour to chair. Legal disciplinary practices, as envisaged by Sir David Clementi, are practices that permit lawyers from different professional bodies to practise together as equals. He concluded in paragraph 1 that, so far as LDPs were concerned,
	"non-lawyers should be permitted to be Managers of such practices, subject to the principle that lawyers should be in a majority by number in the management group. The non-lawyers would be there to enhance the services of the law practice, not to provide other services to the public".
	The amendments in the group are designed to simplify the operation of legal disciplinary practices. That is the whole purpose behind AmendmentNo. 204. Noble Lords will see that AmendmentsNos. 498, 501 and 505 are grouped with this amendment. Amendment No. 498 inserts the provision that,
	"at least three-quarters of the partners are authorised persons or are registered foreign lawyers".
	That is similar in terms to Amendments Nos. 501 and 505. Therefore, we very much follow Sir David Clementi's views.
	The amendments do not refer to multidisciplinary practices or to firms that have external ownership. We are just dealing with the idea that there could be a legal disciplinary practice. In fact, the Law Society has supported legal disciplinary practice for many years. It is known in its terminology as "legal practice plus". It is a means of ensuring that those who play a significant part in the running of a legal practice—for instance, a finance director—can be recognised with the status of a partner even if they are not a qualified lawyer.
	Noble Lords will be aware of my registration of interest, in that I am a partner in the national commercial law firm of Beachcroft LLP, and next year I will have been a partner in that firm for40 years.

Lord Hunt of Wirral: My Lords, I hope that Hansard will record that comment.
	Throughout that time, I have been aware that the status of a partner in a solicitor's firm is something greatly to be envied by those who are not partners. It is a significant status symbol. It is tied up in the shadows of history that someone who is highly competent, who is an accountant and who is running the legal practice is not allowed to be a partner.Sir David Clementi saw that straightaway, and he thought, "Let us now recognise the status of these individuals as partners, even if they are not qualified lawyers". Under the provisions in the Bill—the Government are to be commended for this, although I did not vote in the last Division—there is certainly scope for trying to evolve a system that will work.
	It will now become possible for firms to make non-lawyers partners. But if that is to happen, suddenly the whole panoply of alternative business structures and their licensing regime comes into play. Therefore, the only way in which it will be possible for the finance director, or someone allied to that finance director, to become a partner is if the whole panoply, the separate ABS licensing regime, comes into force.
	I have contended on several occasions, as the Minister will know, that we should not really have this enormous unnecessary, administrative, regulatory burden coming into effect for legal disciplinary practices. I can just see what will happen. The finance director will become a partner; immediately the firm has to become an alternative business structure, and one day the finance director will leave and immediately the poor firm, if it then has a lawyer taking on that position, will cease to qualify as an alternative business structure, when all that will have happened is that the finance director has been replaced by someone who does not fulfil the requirements of the ABS.
	Sir David Clementi's analysis of the issues involved with the various forms of alternative business structures identified that significant additional considerations would arise with, for instance, external ownership. Also, if services were provided that could not be provided by an ordinary law firm, we would have to move step by step in the direction of alternative business structures. However, regarding LDPs that do not have external ownership, he made no sharp distinction between firms in which all the partners were qualified lawyers and firms in which a minority of the partners were non-lawyers.
	I quote again from Sir David's report. He said:
	"LDPs are law practices which permit lawyers from different professional bodies, for example solicitors and barristers, to work together on an equal footing to provide legal services to third parties. They may permit others (e.g. HR professionals, accountants) to be Managers, but these others are there to enhance the services of the law practice, not to provide other services to the public".
	Sir David did, however, argue that lawyers should be a majority by numbers on the management group. These amendments are designed to reinforce that by requiring at least three-quarters of the managers to be lawyers.
	In Committee, the Minister—and I have read and re-read her contribution—expressed concern that the non-lawyers would not be regulated and that that would create a risk to the public and to the public interest. That is emphatically not the intention, nor was it the intention of Sir David Clementi.
	Under the approach of these amendments, the Law Society would need power to establish a register of permitted non-lawyer partner-managers of firms and to set requirements for eligibility to the register. The requirements would be likely to include a character and suitability test, so that individuals who could not by virtue of previous convictions or other misconduct become solicitors would not be permitted to become non-lawyer partner-managers. There might also be a requirement to demonstrate familiarity with the Law Society's principles of professional conduct, since all managers of a firm share responsibility for ensuring that the firm complies with its regulatory responsibilities.
	I concede to the Minister that consequential amendments are likely to be needed to ensure that the Law Society has the necessary powers and to make it clear that partners or managers who are not authorised persons will be fully subject to the Law Society's regulatory regime, including prosecution before the Solicitors Disciplinary Tribunal.
	Finally, the Government have already said that LDPs will be able to operate very soon after Royal Assent. Under the Bill as currently drafted, that is only partly correct, because it will apply only to LDPs where the management group consists entirely of lawyers. These amendments would enable true LDPs, as envisaged by Sir David Clementi, to operate promptly.
	Lastly, I refer to the Joint Committee's recommendation that ABSs should be introduced on an incremental basis. That, in turn, maximises the likelihood that any unanticipated difficulties can be resolved well before the more challenging regulatory issue, such as that on externally owned law firms, needs to be tackled. I beg to move.

Baroness Ashton of Upholland: My Lords, exactly. As the noble Lord, Lord Carlile, said, that is the end of the flattery—but it was, none the less, heartfelt.
	The noble Lord, Lord Hunt, eloquently returned to an issue that we looked at in Committee. The question is the Law Society's ability to regulate practices with up to 25 per cent non-lawyer control without the need for those practices to be licensed under Part 5, and he has set out why he thinks that this is important. Amendments Nos. 311A, 311B, 311C and 632A, tabled with the support of the Institute of Chartered Accountants in England and Wales, would make similar provision for bodies with 25 per cent non-lawyer professionals, albeit that they would be low-risk bodies under the alternative business structure framework, rather than exempt from the framework.
	The amendments would also provide that firms with non-lawyer partners or members who do not provide services to clients should not require those licences. I hope that by this stage in our deliberations noble Lords will accept that I support the creation of practices that have non-lawyers as managers, or which combine the expertise of different professionals in the provision of services. I welcome very much both the Law Society and the Institute of Chartered Accountants facilitating and regulating such practices. I have said on many occasions that increased opportunities to leverage non-lawyer expertise into the legal services market is certain to create advantages both for consumers and for providers.
	What I cannot accept is exemption from Part 5 altogether for regulated practices within the proposed boundaries, which would go against a key principle of the Legal Services Bill and our proposals for alternative business structures. Our policy is to create, as far as is possible, a level playing field between regulators, offering all the potential to become licensing authorities. We could risk the opposite outcome. I know that that is not the intention of the noble Lord, but I do not wish to endorse a provision that gives one regulator a potential competitive advantage, first, by virtue of reaching part of the alternative business structure market before other regulators and, secondly, by avoiding the additional statutory requirements that would otherwise apply to these practices.
	I also do not want to endorse a proposal that gives a competitive advantage to non-lawyers who are regulated professionals, particularly given the concerns that conflicts between professional rules may be one of the most complex challenges for those involved in alternative business structures. So I am opposed in principle to exemptions and carve-outs from the Part 5 regime. Certain forms of exemption may, arguably, facilitate an incremental approach in the short term; in the longer term, however, we run the risk of creating loopholes and possible confusion.
	We have tried in the Bill to make a clear, principled distinction between two types of practice. A body either has non-lawyers in positions of control or it does not. Consequently, it is either a licensable body or it is not. As I have stated, in the framework we have already provided for flexibility as far as low-risk bodies and other special bodies are concerned, but we have set 10 per cent as a maximum level on the basis that we think that control above that level becomes too significant to benefit from lesser scrutiny.
	In principle, the Government's policy is that bodies with non-lawyer ownership or management should be subject to the safeguards of Part 5. Therefore, if we were to make an exception for Law Society practices, such practices could emerge without any need for the Legal Services Board to designate the Law Society as a licensing authority. It would not be required to fulfil the relevant obligations. That is not to say that the Law Society would or could not create similar safeguards, but we would have no guarantees in statute. We would run the risk of exposing consumers to inconsistent levels of regulatory protection and we would not have, at least for several years, any board of supervision. I have similar objections to any exemption for bodies with non-lawyer partners, client-facing or otherwise.
	I hope that the noble Lords will agree that it is crucial that we get this right from the outset. The incremental approach suggested by the noble Lord, Lord Hunt of Wirral, would be of little value if it could not be monitored and supervised by the board and if it proceeded with none of the safeguards that we have identified as essential to support alternative business structures. With the greatest respect to the noble Lord, I do not think that what he suggests quite fulfils the objectives set out by Sir David Clementi.

Lord Hunt of Wirral: My Lords, this has been a very helpful debate, because I sense that the Minister and many of us are ad idem and want to achieve the same objective. I hope that, if there is time before the Third Reading, the Minister will look again atSir David Clementi's report, as he spoke about the first step, which would facilitate the emergence of MDPs or alternative business structures at a subsequent date. I suppose that I am just talking about that first step, but, in the light of the comforting words that the Minister has uttered and the comments that she made at the outset of her speech, I shall be quixotically chivalrous and acknowledge how grateful I am to her for all that she has said tonight. I beg leave to withdraw the amendment.

Baroness Ashton of Upholland: My Lords, noble Lords will recall that there was considerable debate in Committee over licensing authorities' duties and whether and how we might reinforce them. There was also concern about the effects on access to justice of ABS firms, and what the licensing authorities should be obliged to do about it. I said then that the Government broadly agreed with noble Lords that improving access to justice was of course important.
	It is possible that some noble Lords believe that to impose a duty specific of access to justice might be a more appropriate way to handle this, but we have sought to look at the interaction between access to justice and the other regulatory objectives in play. I make it clear that we do not wish to sideline access to justice issues. Licensing authorities will have to consider that interaction as part of their obligation, but we want them to do so in terms of and alongside its interaction with the other regulatory objectives; and to consider how they address it when considering applications for licences and special body modifications, the imposition of conditions and all other licensing functions. The fact that the duty does not single out access to justice means that authorities will have to consider the interaction of access to justice with other objectives, as I have indicated. The amendment also places policy statements, approval before their use and oversight of their use under the board's supervision. I beg to move.

Baroness Ashton of Upholland: My Lords, in moving the amendment, I shall speak to Amendments Nos. 250, 251, 257 and 276. I am extremely grateful to the noble Lord, Lord Kingsland, for raising the point in Committee on 6 February about the role that the LSB would play as a licensing authority. I agreed to look at the drafting of Clause 81, and said that I would explore further possible amendments to emphasise the Government's policy intentions in this area more clearly.
	After further consideration, I concluded that the general obligation in Clause 81(1), which provides that the board is required to make licensing rules within12 months of a date set by the Secretary of State—now the Lord Chancellor—should be amended, and that the board will have to make licensing rules only when there is evidence and a decision made under Schedule 12 that the board needs to act. That is when there is no other licensing authority with suitable arrangements in place for a particular type of body, or in the case of non-commercial bodies, there is no licensing authority able to offer appropriate terms.
	That approach reinforces the role that the Bill sets for the board as a licensing authority of last resort and avoids requiring the board to automatically make licensing rules. This would have required it to formulate different sets of licensing rules for categories of bodies that it may never have needed to license. The amendment provides that the board writes licensing rules only when there is a clear need for it to do so, which allows the board to focus on its primary role of oversight regulator during the crucial time of implementation, while assuring existing regulators that it will not be competing with them to formulate licensing rules.
	I am confident that this amendment reinforces our intention that the board should act only as a licensing authority as a last resort and should not compete with other approved regulators. Again, with grateful thanks to the noble Lord, Lord Kingsland, for raising the matter, I beg to move.

Lord Carlile of Berriew: My Lords, given my comments on Amendment No. 202, it will be no surprise to the House to know that I support these amendments. We regard specificity about access to justice as essential as we fear that otherwise there will be a real diminution of access to quality justice in Wales, the west country and parts of the north-east and north-west, a reduction in the number of firms of solicitors and a risk of law by call centre. We support these amendments.

Baroness Ashton of Upholland: My Lords, I start by saying that I could not agree more on the importance of access to justice; it is vital. I have approached it by seeking to recognise that when licensing authorities are operating they must balance access to justice correctly against other objectives and ensure that it is achieved. In that respect there is nothing between us.
	I have sought to put access to justice in the context of enabling it to be balanced so that it can be achieved taking into account the other regulatory objectives. The interaction of those objectives is important. I appreciate what the noble Lord, Lord Kingsland, said about Amendment No. 248, but I want that to be seen as reinforcing that as effectively as possible. We must make sure that we not only get a balance but also that the other objectives are not lost or forgotten, or, indeed, that the holistic approach of the regulatory objectives, working together, means access to justice is suitably protected.
	What I am trying to demonstrate is that we have taken all the regulatory objectives and said, "These are critical"; access to justice certainly is. But all of them need to be considered effectively and properly. That is my difficulty with Amendment No. 252. I do not in any way differ from the requirement about access to justice issues—the noble and learned Baroness indicated that in the examples she gave; the noble Lord, Lord Carlile, gave examples in the context of the Part 5. We must make certain that access to justice is protected. But I want it to be done with the other objectives. All I am saying is that they are all important; they all have to be dealt with properly; and they all have to be, within the context of the amendments I am moving, seen to be important—an issue we will come on to in terms of reporting and so on. It does not mean that I am in any way suggesting that access to justice is less than very important; I am simply saying that actually all the objectives are and that it needs to be considered as critical alongside the other objectives.
	I have problems with two of the amendments within the group. Amendment No. 253 in a sense seeks to give priority to access to justice by imposing a requirement that it is not quite the same as a regulatory objective. There is a risk in that. A similar obligation that is not quite the same could cast doubt on what we mean by access to justice, and I do not want anything in the legislation that could create confusion about how you interpret the objectives and over what the licensing authorities' duties are.
	Amendment No. 254 has the list of groups of consumers. Noble Lords will know—I indicated this in Committee—from my previous existence in education and all the way through my existence as a DCA Minister that I really do not like lists in legislation. The use of different phrases can cause confusion. If we single out four groups of consumers we fail to recognise other consumer interests as well. We have had much debate, as I have already indicated, about the effect of alternative business structures on rural communities and those who are poor and their use of legal services. I absolutely agree that they must not be disadvantaged. Equally, I do not want other consumers to be disadvantaged. Everyone's access to justice is important. The general duty to consider the interests of all consumers avoids trying to put some consumer interests behind the interests of other people. I think that that can be achieved without AmendmentNo. 254.
	As I tried to indicate in debate on Amendment No. 248, we need to make sure that the regulatory objectives are protected. Access to justice is very important. I do not think that the amendments before us make the position any better and they risk creating problems I would rather see avoided. But I support the contention of making sure that access to justice is very important and hope that the noble Lord will withdraw the amendment.

Lord Evans of Temple Guiting: moved Amendments Nos. 284 to 290:
	Schedule 13 , page 187, line 14, leave out "Secretary of State" and insert "Lord Chancellor"
	Schedule 13 , page 187, line 35, leave out "Secretary of State" and insert "Lord Chancellor"
	Schedule 13 , page 188, line 10, leave out "Secretary of State" and insert "Lord Chancellor"
	Schedule 13 , page 191, line 21, leave out "Secretary of State" and insert "Lord Chancellor"
	Schedule 13 , page 192, line 3, leave out "Secretary of State" and insert "Lord Chancellor"
	Schedule 13 , page 198, line 30, leave out "Secretary of State" and insert "Lord Chancellor"
	Schedule 13 , page 199, line 3, leave out "Secretary of State" and insert "Lord Chancellor"
	On Question, amendments agreed to.
	Clause 88 [Duties of non-authorised persons]:
	[Amendment No. 291 not moved.]
	Clause 89 [Duties of Head of Legal Practice]:
	[Amendment No. 292 not moved.]
	Clause 90 [Duties of Head of Finance and Administration]:
	[Amendment No. 293 not moved.]
	Clause 91 [Information]:
	[Amendment No. 294 not moved.]
	Clause 92 [Enforcement of notices under section 91]:
	[Amendment No. 295 not moved.]
	Clause 93 [Financial penalties]:

Lord Hunt of Wirral: My Lords, I am very grateful to the Ministers for sharing their thoughts behind Amendment No. 317. It might be convenient for the House if we considered Amendments Nos. 316 and 317 together, because undoubtedly the noble Lord, Lord Evans of Temple Guiting, sees AmendmentNo. 317 as a better alternative to Amendment No. 316. I concede that Amendment No. 317 sets it out clearly that the board's annual report will have to deal with the activities of licensing authorities and licensed bodies and the way in which those activities have affected the regulatory objectives. It applies, of course, not to the first annual report but to subsequent reports.
	The noble Lord, Lord Evans of Temple Guiting, may recall that I gave an example in Committee of the whole procedure of personal injury compensation to which the noble Lord, Lord Carlile of Berriew, referred. The Government introduced the conditional fee agreements, which became known as "no win, no fee", against a background of no real research. It soon became clear that things were beginning to go wrong. We saw that with the television advertisements that suggested, "Where there is blame, there is a claim, and it will not cost you a penny", and with the rise of Claims Direct, the Accident Group and Tag. I told the previous Lord Chancellor, the noble and learned Lord, Lord Irvine of Lairg, on several occasions that some careful studies should have been made before the step into the unknown was taken. I understood at the time that it was because of Treasury pressure on budgets. The budget was no longer there, so civil legal aid had to be dramatically cut, and the subsequently named Department for Constitutional Affairs thought that "no win, no fee" agreements were the only way forward.
	I give that as an example because it is very similar to the situation now. The whole procedure involved in setting into being this new structure is, to some extent, a step into the unknown. I well understand the noble Lord, Lord Carlile, saying that we should take it all out of the Bill, because there is no doubt that there are fears and concerns about what this new system will do, particularly in certain respects.
	My argument, however, is linked much more to Sir David Clementi's report, because the review set out a procedure that envisaged a step-by-step approach towards LDPs, and rather rejected the idea of multi-disciplinary practices as a necessary concomitant, further progression of the notion of these new structures. We are therefore going between Sir David Clementi and the unknown, and we do not know what will happen. This is why the noble and learned Lord the Lord Chancellor, who is introducing this policy, rather than the board should make preparations for the study to be commenced as soon as regulations bringing this part into force are produced. Then let us have a proper debate about it before we move to the next stage.
	I realise that this falls foul of the Government's intention to move with one bound to free the structures in a dramatic way. Their alternative may deal with the problem in subsequent years, but I would like at the outset to have a careful study into what will happen. I beg to move.

Lord Hunt of Wirral: My Lords, I am much persuaded by the noble Lord and his offer to improve government Amendment No. 317 is readily accepted. But having listened to his detailed explanation, I am now absolutely convinced that these two amendments stand side by side; Amendment No. 316 to cover the immediate position and Amendment No. 317 to provide a way into the future whereby the study under Amendment No. 316 can be followed up time and again through the mechanism of the annual report. I am grateful to the Minister, but I am still persuaded that Amendment No. 316 can sit alongside Amendment No. 317, so I would like to test the opinion of the House.

On Question, Whether the said amendment(No. 316) shall be agreed to?
	Their Lordships divided: Contents, 36; Not-Contents, 38.

Baroness Ashton of Upholland: moved Amendments Nos. 318 and 319:
	Clause 108 , page 58, line 28, leave out from "not" to end of line 31 and insert "within subsection (2);"
	Clause 108 , page 58, line 37, at end insert—
	"(2) The following persons are within this subsection—
	(a) an authorised person in relation to an activity which constitutes a reserved legal activity, (b) a registered foreign lawyer (within the meaning of section 89 of the Courts and Legal Services Act 1990(c. 41)), (c) a person entitled to pursue professional activities under a professional title to which the Directive applies in a state to which the Directive applies (other than the title of barrister or solicitor in England and Wales), (d) a body which provides professional services such as are provided by persons within paragraph (a) or lawyers of other jurisdictions, and all the managers of which and all the persons with an interest in shares in which— (i) are within paragraphs (a) to (c), or (ii) are within this paragraph by virtue of sub-paragraph (i).
	(3) In subsection (2)(c) "the Directive" means Directive 98/5/EC of the European Parliament and the Council, to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained."
	On Question, amendments agreed to.
	[Amendment No. 320 not moved.]
	Schedule 15 [The Office for Legal Complaints]:

Lord Kingsland: My Lords, I shall speak to Amendment No. 325 as well. Both amendments address the relationship between the Lord Chancellor and the Office for Legal Complaints. They were debated at some length on 21 February, as reported at columns 1088 to 1094 of Hansard. Your Lordships will be relieved to hear that I have no intention of rehearsing the arguments advanced at that time. I will simply summarise our submissions on the matter.
	Amendment No. 322 would take away from the noble and learned Lord the Lord Chancellor the power to alter the number of members of the Office for Legal Complaints. We do not agree with the Minister's analysis in Committee when she said:
	"The Secretary of State ... is best placed to do that".—[Official Report, 21 February 2007; col. 1090.]
	This function should really be undertaken by the board. The Office for Legal Complaints is directly answerable to the board, not to the noble and learned Lord.
	The vote on Monday, protecting the independence of the board, adds a great deal of weight to my case. It should be an independent board that takes administrative decisions over the Office for Legal Complaints. I agree with the analysis in Committee of my noble and learned friend Lord Lyell of Markyate that the principle raised by Amendment No. 325, which relates to the removal of the chairman of the Office for Legal Complaints, is, if anything, the more fundamental of the two in this group.
	Both amendments would reduce the Lord Chancellor's inappropriate influence over the Office for Legal Complaints in the Bill. As I indicated in Committee, if the noble and learned Lord the Lord Chancellor were to disagree with the Legal Services Board on either the chairmanship or the number of members of the Office for Legal Complaints, it would be appropriate for him to take up the issue with the board, not to have the power to act on his own behalf. I beg to move.
	Baroness Ashton of Upholland: My Lords, I am concerned that the amendments stem from a worry that the Lord Chancellor would have undue influence over the Office for Legal Complaints and I genuinely do not believe that that is the case. The role of the Lord Chancellor in setting the size of the board or in consenting to the removal of the chairman of the OLC is non-interventionist. He will not change the size of the OLC of his own volition nor can he remove the chairman of the OLC. The OLC is a non-departmental body and as such is ultimately accountable to Parliament. It therefore must be right that the Lord Chancellor have the minimum of involvement in how the OLC is constituted. But when I say "minimum", I mean exactly that. The Lord Chancellor has no role in approving any of the rules that the OLC makes in setting out how complaints can be handled, with only one exception: the rules on case-handling fees. He certainly has no role in appointing ombudsmen to determine complaints or in handling individual complaints. Therefore, any concern that he would have undue influence over the OLC is not substantiated. I hope that the noble Lord will withdraw the amendment.

On Question, Whether the said amendment(No. 322) shall be agreed to?
	Their Lordships divided: Contents, 33; Not-Contents, 40.